United Airlines reported a net loss of US$2.4 billion (RM9.89 billion) for the first quarter of 2021 on Monday. The large net loss primarily came about due to an increase in fuel prices. The decreased number of flights which the airline operated during the quarter also caused United’s finances to suffer.
During the first quarter of this year, the average fuel price increased to US$1.74 per gallon (RM1.89 per litre) from the price at the end of the fourth quarter of 2020. In addition, passenger traffic declined by 52% in comparison to that of the same period of one year prior.
United Airlines mentioned that it expects fuel prices to increase by a further 5% during the second quarter. The airline, however, also expects capacity to gradually return to its level before the onset of the Covid-19 pandemic. Due to this expected increase in the public’s willingness to travel, United expects to turn a profit in the second half of 2021. It expects capacity levels in the second quarter to be at 45% of the level at which they were in 2019.
United’s adjusted net loss in the first quarter exceeded the net loss which many analysts expected it to suffer. The airline lost a net value of US$2.4 billion (RM9.89 billion), thus losing more than the expected US$2.23 billion (RM9.19 billion).
To increase its international reach and give a boost to its profit margin, United will add several new flight routes. These routes go to the cities of Reykjavik, Iceland; Dubrovnik, Croatia; and Athens, Greece. The flights to Reykjavik will originate from New York City and Chicago. Flights to Dubrovnik and Athens will also start in New York; one other route will go from Washington, D.C. to Athens. United selected these three locations because they are in countries which chose to reopen borders to vaccinated international travelers.
Although business and long-haul international demand will likely remain well below pre-pandemic levels, United expects these new flight routes to increase its overall adjusted earnings for the year. It believes that adjusted earnings before interest, taxes, depreciation, and amortization will eventually become positive.
United Airlines expects its second-quarter total unit revenue to fall by 20% when compared to that of the second quarter of 2019. This fall would be less severe than that of the first quarter and its corresponding period of two years ago. The figure for the first quarter of 2021 in comparison to that of 2019 was 27%.
In addition, United’s total revenue fell to US$3.2 billion (RM13.2 billion) in the first quarter. This represented a decline of 66% when compared to the same period in 2019.
20th April 2021 14:44
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