United Airlines Earnings: Managing Well in a Historic Downturn

On Tuesday afternoon, United Airlines (NASDAQ: UAL) became the second airline to report its second-quarter results, after Delta Air Lines (NYSE: DAL) announced a $7 billion pre-tax loss last week ($3.9 billion excluding special items).

As expected, United Airlines also racked up a substantial loss last quarter, as the COVID-19 pandemic crushed air travel demand. However, it did a better job of mitigating the short-term earnings and cash-flow pressure from the pandemic than Delta. That's a big accomplishment, as United faces a tougher road to recovery than perhaps any other airline, due to its heavy exposure to long-haul international travel.

United Airlines' revenue plunged 87.1% year over year last quarter to less than $1.5 billion. However, the airline also reduced operating expenses (excluding special items) by a stunning 53.7%, despite not being able to implement involuntary layoffs or furloughs due to the terms of its CARES Act payroll support. Including the grant portion of United's payroll support funds as an offset to payroll expense, operating costs plunged 69.9% year over year.

Source Fool.com