United Airlines announced today its 2020 financial results along with recovery plans for 2021. The airline has used cost savings, liquidity funding, and cash burn to get through 2020 which was mostly squashed due to the COVID-19 coronavirus.
United Airlines (UAL) announced it will focus on financial recovery for the year 2021 with optimistic expectations to exceed the 2019 Adjusted EBITDA margin by the year 2023. The Adjusted EBITDA margin is a non-GAAP financial measure calculated as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). It excludes special charges and unrealized (gains) losses on investments, divided by total operating revenue.
Since the beginning of the COVID-19 crisis, United Airlines has raised over $26 billion in liquidity and made progress in reducing core cash burn to ensure the company’s survival. Over the last three quarters, the company has identified $1.4 billion of annual cost savings and has a path to achieve at least $2.0 billion in structural reductions moving forward.
United ended 2020 with $19.7 billion in available liquidity, including an undrawn revolver capacity and funds available under the CARES Act loan program from the US Treasury. Having stabilized its financial foundation, the company expects 2021 to be a transition year that’s focused on preparing for a recovery. United has resumed heavy maintenance and engine overhauls, investments that are essential to recovery when demand returns. Just yesterday, United announced the appointment of a new Senior Vice President of Worldwide Sales.
The combination of structural cost reduction and timely investments will hopefully set up United to exceed its 2019 adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin in 2023. The company expressed high confidence that it would achieve this target by 2023 and said its ongoing recovery planning would help ensure the company was equipped to reach this level even sooner, if demand returns more quickly.
“Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision making. But, the truth is that COVID-19 has changed United Airlines forever,” said United Airlines CEO Scott Kirby. “The passion, teamwork and perseverance that the United team showed in 2020 is exactly what will help us build a new United Airlines that’s better, stronger and more profitable than ever. I could not be prouder of – and more grateful to – this team, which is going to lead us there.”
