According to United Airlines CEO Scott Kirby, “Cash burn is the most important metric.”
United Airlines chief relayed in a statement that the company has managed to keep the company from bleeding money amidst the country’s raging battle against the pandemic. But unless a vaccine has been found, usual revenues will not be met.
For the previous quarter, the airlines company was reported to lose $1.6 billion in a matter of three months, just a little short of the expectations of analysts.
The aviation industry is among the American sectors that are suffering from the financial mayhem brought about by the coronavirus outbreak. Airline services have low demand due to restrictions imposed by governments to contain the virus. United Airlines is no exception, with the revenue from the company about 90 percent less than what the company was making last year.
United Airlines revealed that they are actually losing $40 million every day, which still fares better than last April’s bleeding of $100 million. Their expectations are to lower the hemorrhage of cash from the company by $25 million at the next quarter.
In an interview with CNBC, CEO of United Airlines, Scott Kirby, who assumed post on May 2021 which was decided long before the pandemic, shared that “cash burn” is the most important metric.
He also emphasized how a vaccine will solve their trouble. “We don’t expect to get anywhere close to normal until there’s a vaccine that’s been widely distributed to a large portion of population.” He also foresees lowered airfares for the meantime.
As per a statement made by Kirby, he explained how they were able to mitigate the impact of travel restrictions to businesses such as like them. It boils down to accurate projections. Kirby stated: “We expect United produced fewer losses and lower cash burn in the second quarter than any of our large network competitors.”
He further shared: “We accomplished this by quickly and accurately forecasting the impact that COVID would have on passenger and cargo demand, accurately matching our schedule to that reduced demand, accurately matching our schedule to that reduced demand, completing the largest debt financing deal in aviation history, and cutting expenses across our businesses.”
This coping mechanism of the United Airlines didn’t seem to wow investors, as CNN noted. The company’s stock dipped by three percent. This came as the company gave caution to the investors that unless a vaccine for the COVID-19 is distributed, United Airlines anticipates it could not meet more than half of their usual revenue. Their CEO also noted they could “plateau at about 50 percent before we get to a vaccine.”
The air travel companies, including United Airlines, are in a challenging position to ease down the anxiety of the public to fly in the midst of a pandemic. Health experts even warned that flying can still be a health risk. As an attempt to lower the worries of passengers, the carriers implemented strict mask policies.