United promises more cost cuts as cash burn rises

United vowed to step up its cost-cutting efforts after its cash burn rose in the fourth quarter because of interest payments on its mounting debt and the costs of reducing staff. Scott Kirby, CE at the US carrier, said the Covid-19 pandemic “has changed United Airlines forever” and that the company planned to make “structural reductions” that would make it “more profitable than ever”. The company said that in two years it will beat the 15.8% margin on earnings before interest, taxes, depreciation and amortisation that it posted in 2019, before the pandemic crushed demand for air travel. But in Q4 of 2020, the airline’s cash burn rose to $33m a day from $25m a day in Q3. The amount devoted to servicing debt and paying severance to employees rose from $4m to $10m a day. United cut 22,000 jobs because of the crisis, although it temporarily recalled some of those workers after US lawmakers in December approved a further $15bn in aid to the battered industry. The aid extends a programme to support payrolls until March 31. The carrier was the second US carrier after Delta to release results for 2020, a year that punished airlines worldwide as governments imposed restrictions on travel. United posted a net loss of $1.9b for Q4 and $7.1b for the whole of 2020. Operating revenue for Q4 increased to $3.4b from $2.5b in the previous quarter, as Americans chose to travel for the Thanksgiving and Christmas holidays despite government warnings. Revenue was still down 69% from Q4 of 2019. <br/>