United’s losses mount but airline expects to surpass 2019 margins in 2023

United Airlines on Wednesday said it expects to surpass its pre-pandemic margins by 2023 but warned sales would suffer early this year as the Covid health crisis wears on.

United swung to a net loss of $1.9 billion in the fourth quarter from a $641 million profit a year earlier. Fourth-quarter revenue fell 69% to $3.41 billion, below analysts’ estimates of $3.44 billion.

The carrier’s full year net loss of $7.07 billion was the largest since 2005, according to FactSet.

“Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision making. But, the truth is that COVID-19 has changed United Airlines forever,” the carrier’s CEO, Scott Kirby, said in an earnings release.

Airline executives have said widespread availability of coronavirus vaccines will fuel a recovery in air travel. But the vaccine rollout has been slow and chaotic, marked by a shortage of doses.

While United was upbeat about its 2023 goal, the carrier isn’t expecting a quick turnaround early this year. First-quarter revenue will likely come in 65% to 70% below 2019 levels, the airline said. It estimated capacity in the first three months of 2021 will be at least 51% below the same period in 2019, echoing a similar outlook from American Airlines.

United burned about $33 million a day on average in the quarter, including debt and severance payments. Core daily cash burn, which strips those items out, averaged $19 million in the fourth quarter, $5 million less than the third quarter. The Chicago-based airline reported an adjusted loss of $7 a share, compared with estimates for a loss of $6.60 per share.

Here’s how United performed in the quarter, compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

• Adjusted earnings per share: a loss of $7 versus an expected loss of $6.60 a share.
• Revenue: $3.41 billion versus expected $3.44 billion in revenue.

United’s cargo business again proved to be a bright spot in the pandemic with revenue jumping 77% in the quarter to $560 million. That unit contributed 16% of its fourth-quarter revenue, up from just a 3% a year earlier. Passenger airlines last year raced to beef up those business as customers faced a worldwide crunch in air freight capacity.

United’s shares were down 2.3% in after-hours trading following the report.

United executives will hold a call to discuss its revenue and outlook at 10:30 a.m. ET on Thursday. American Airlines and Southwest Airlines are scheduled to report results next week.