United Airlines loses $1.6 billion in second quarter

United Airlines (UAL) announced on Tuesday that it had a loss of $1.6 billion, or $5.79 a share, in the second quarter. The loss is mainly as a result of the impacts of the coronavirus pandemic. In the same period a year ago, the airline reported a profit of $1.05 billion, or $4.02.

In the last three months, ending in June, the revenue of United plunged to $1.48 billion, an 87% decrease from the same period a year ago. In spite of the sharp drop, the company still beat analysts’ estimate of $1.32 billion loss. The major cause for the plunge in the air travel industry and demand is the coronavirus pandemic. As it stands, United isn’t the only airline to suffer major losses during the last quarter. Many airline companies have struggled to cut their cash burn since the start of the pandemic. After many years of building a proper business structure, United Airlines and its competitors are now dealing with what is expected to have long-lasting impacts from the pandemic.

United is likely to reduce cash burn to $25 million a day in the third quarter from the average $40 million daily from the second quarter. In addition, the airline has also slashed thousands of flights and paused plane scores to further cut its costs. The airline said its performance in the third quarter will likely drop 65% from the same period a year ago.

“United believes it did the best job of matching capacity to demand among its largest network peers,” the company said in its earnings release. “The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.”

“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, completing the largest debt financing deal in aviation history, and cutting expenses across our business,” chief executive Scott Kirby said.

The airline called the second quarter “the most difficult” quarter since its 94-year history. On Monday, the company’s liquidity was about $15.2 billion, and the airline said it expects liquidity to be more than $18 billion in the third quarter.