United Airlines (UAL) announced its Q1 earnings on Monday as news of new virus variants and rollout of vaccines continue to make headlines. The airlines reported a decline of 66% in operating revenue to $3.2bn vs. Q1 2019 and a net loss of $1.4bn and an adjusted net loss of $2.4bn after adjusting for operating and non-operating special charges, and unrealized gains and losses on investments. The company, which is sitting on a liquidity of $21bn, had a cash burn of $9mn/day during the quarter. While the Q1 metrics were below estimates, the company returned to positive core cash flow in March and aims to achieve a positive adjusted EBITDA in future through improved customer satisfaction and by harnessing improved air travel demand to locations where vaccinated travelers are permitted even though the international demand remains subdued at 70% of 2019 levels. This is the company’s fifth straight quarterly loss. For Q2, UAL expects an EBITDA  margin of ~(20%) based on ~20% lower Total Revenue per Available Seat Mile (TRASM) and ~45% reduction in capacity vs. 2Q2019. CEO Scott Kirby remained upbeat after the recovery in March and said, “The United team has now spent a year facing down the most disruptive crisis our industry has ever faced…” and added “(We) now see a clear path to profitability…. we’re as confident as ever that we’ll hit our goal to exceed 2019 adjusted EBITDA margins in 2023, if not sooner.”
UAL’s 5% 2024s and 4.625% 2029s were down 0.19 and 0.57 to trade at 102.81 and 104.1 respectively.
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