United shares lose altitude after weak Q1 forecast
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 firstquarter revenue will be down 65% to 70% from a year ago. That was five points worse than Delta’s 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.
United CEO Scott Kirby downplayed the importance of short-term predictions about travel demand.
“I know we have created a fair bit of angst among investors by not being willing to say that we think the inflection point on demand is right around the corner, 60 days away,” Kirby told analysts. “While our base case is that the turning point is coming a little bit later than maybe some others think, that turning point is coming, and it’s going to come at the same time for all airlines.”
Shares of Chicago-based United Airlines Holdings Inc. fell 5.7%.
Kirby said travel won’t really recover until “a critical mass” of Americans get vaccinated and experts conclude that the shots will protect people from transmitting the virus. When that happens, he said, “it could be a very rapid increase in demand.”