|Staff Reporter |||Apr 21, 2020 06:42 PM EDT|
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United Airlines announced on Monday that it lost $2.1 billion in the first three months this year, its biggest decline since 2008, as the ongoing global health disaster has crippled travel demand to its worst level in decades.
The Chicago-headquartered carrier disclosed it has applied for federal funding worth up to $4.5 billion, on top of around $5 billion in government payroll grants to weather the storm.
United Airlines is the first American carrier in the first three months of the year to outline the financial effect of the virus on its operations, even though the information is preliminary.
Airlines are in total desperation to remain afloat. Carriers across the US and around the globe have scrambled for aid to collect cash and cover many of their fixed expenditures including workers, aircraft rentals and debt payments.
The U.S. Treasury is giving airlines some $25 billion in payroll assistance to help offset the deficit. United said the rescue plan, which is part of the $2 trillion CARES Act, would welcome the $5 billion.
Moreover, United disclosed that it has applied for a separate $4.5 billion funding from the US Treasury from a separate $25 billion CARES Act aid intended to ease the company's other fixed costs.
United Airlines has lost about $100 million a day in the last two weeks in March relative to the previous year. Analysts agree it is a huge figure, but with the number of flights the company scrapped, their costs are at least down slightly as well, although not quite proportional to revenue losses.
The carrier saw a 97 percent decline in passenger volume in the first two weeks this month. Last year, they had more than six million travelers during the period, while this year United had under 200,000 travelers as the airline cuts capacity by 90 percent starting May and June. It forecasts to transport less passengers in all of May this year than they flew in a single day in the same month last year.
Separately, United said it has signed a sale-and-lease deal with BOC Aviation for 16 Boeing 737 Max aircraft and 6 Boeing 787-9 aircraft, expected to be delivered this year.
Over the past three months, the stock has lost 67.6 percent over Friday, while the Dow Jones Industrial Average DJIA has declined 17.4 percent, -2.44 percent.
The disorder and draconian measures to stop the pandemic from spreading like stay-at-home orders have devastated demand for air travel and caused airlines to cut much of their flights.
Airlines, like United, are not anticipating a quick turnaround in demand, underscoring how customers are not willing to return to air travel in the immediate or medium term amid debates on when to restart the economy.
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