U.S. airlines see recovery signs, United expects to end cash burn in March

posted on 16th March 2021 by Eddie Saunders
U.S. airlines see recovery signs, United expects to end cash burn in March

U.S. airlines pointed on Monday to concrete signs of an industry recovery as a slowing Covid-19 pandemic helps leisure bookings, and United Airlines said it expects to halt its cash burn in March.

“I do think we’re near the end of the virtual world,” United Chief Executive Scott Kirby said at a J.P. Morgan conference.

Kirby said he expects core cash burn to be positive in March. That is expected to continue after March, assuming the current bookings trajectory remains in place, he said.

Chicago-based United, which had been among the most pessimistic of the airlines heading into the pandemic a year ago, is the first to say it could hit the industry’s cash burn milestone.

Shares of United surged 7.1% to $60.30 in early trading on the New York Stock Exchange.

Delta Air Lines, Southwest Airlines and JetBlue Airways each said first-quarter revenue would decline at the low end of projections or less than previously forecast as vaccine rollouts accelerate and more people plan vacations or visits to friends and relatives

Delta CEO Ed Bastian, speaking at the same conference, said there are “real glimmers of hope” and that he was “cautiously optimistic” that the airline could halt its cash burn this spring.

Shares of Delta were up 3.6% on the NYSE while those of Southwest were up 1.3%. JetBlue’s stock gained 1.4% on the Nasdaq.

More than 1.3 million passengers were screened in U.S. airports on Friday and Sunday, according to Transportation Security Administration data, the highest number since the pandemic crushed air travel in 2020.

Delta, which said it will use cash for aircraft purchases in the second quarter, expects its first-quarter revenue decline to be at the low end of its forecast for a 60% to 65% decline from the same quarter in 2019, before the onset of the pandemic.

Southwest forecast lower cash burn in the first quarter on Monday and a lower decline in operating revenue for February and March than previously forecast.

JetBlue also forecast a slowing pace in its first-quarter revenue drop, projecting a decline of between 61% and 64%, compared with the same period in 2019. It had previously forecast a fall in revenue of 65% to 70%.