Shares of United Airlines are falling after the company gave a weak forecast for its revenue in the first three months of 2021
United Airlines officials said Thursday that travel will recover from the pandemic, but they just don’t know when, and investors appeared to punish the airline for that doubt and a cautious outlook for early 2021.
The comments came one day after United reported a $1.9 billion loss in the fourth quarter, slightly worse than expected. United also gave a slightly more pessimistic first-quarter outlook than rival Delta Air Lines did just last week.
The January-through-March period is a slow time for air travel even in normal years, but United said first-quarter revenue will be down 65% to 70% from a year ago. That prediction was five points worse than Delta forecast and implied no real improvement over United’s fourth quarter.
United executives also declined to say when they expect to break even after losing $7.1 billion in 2020. Delta said it will reach break-even in the second quarter. Both are cutting costs while waiting for widespread vaccinations against COVID-19 to make people feel safer about flying.
United CEO Scott Kirby downplayed the importance of short-term predictions about travel demand.
Kirby said travel won’t really recover until “a critical mass” of Americans get vaccinated and medical experts conclude that the shots will protect people from transmitting the virus. When those things happen, he said, “it could be a very rapid increase in demand.”
Cowen analyst Helane Becker said United’s weaker outlook compared with Delta should be expected because several of United’s key markets — San Francisco, Chicago and the New York City area — have been hit harder by travel restrictions. She said United is also more dependent on international travel, which has been particularly depressed.
David Koenig can be reached at www.twitter.com/airlinewriter