United Airlines (NASDAQ: UAL) continued to struggle mightily last quarter. A resurgence in COVID-19 cases during the autumn crimped a nascent recovery in air travel demand. Cash burn significantly exceeded management's initial guidance. United also burned much more cash than top rival Delta Air Lines (NYSE: DAL) . However, management seemed confident that the underlying business would fully recover by 2023. Let's see what this news means for investors.
During the third quarter, United Airlines' daily cash burn averaged $21 million, excluding $4 million per day for debt and severance payments. Three months ago, management predicted that cash burn would slow to a range of $15 million to $20 million per day in the fourth quarter, excluding $10 million per day of debt and severance payments.
Unfortunately, air travel demand began to sag in November as the pandemic worsened in the U.S. Trends worsened further in December. As a result, United acknowledged last month that Q4 daily average cash burn would come in higher than its initial forecast, at roughly $24 million to $26 million before debt and severance payments.
For further details see:
United Airlines Posts Ugly Q4 Results, but Promises Full Recovery by 2023