2020 April, 22, 05:12:39 PM

United Airlines Saw Pretax Loss Of $ 2.5 Billion In The First Quarter

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(Reuters) - United Airlines (UAL.O) said on Monday it expects to report a pretax loss of about $2.1 billion for the first quarter, hurt by a precipitous drop in travel demand from the coronavirus outbreak which has weighed on its investments in Latin America.

The loss includes just over $1 billion in special charges, mainly reflecting a reserve on a loan United made in connection with an investment in Colombia’s Avianca Holdings (AVT_p.CN) as part of its plans for a larger tie-up in Latin America.

The loan was backed by a controlling interest in Avianca, which has not flown any passenger flights since March 24 as its main Colombia and El Salvador hubs shut down their air spaces.


Avianca has furloughed half of its staff with no pay and has not publicly disclosed when it expects to fly again as governments in Latin America repeatedly extend quarantines.

United also wrote down the value of its investments in Brazilian carrier Azul Linhas Aereas Brasileiras and took a $50 million impairment charge for its routes in China, where the coronavirus first started to affect travel in January.

Chicago-based United said it only plans to fly about 10% of its normal schedule in May and June.


The U.S. carrier said it expects to borrow up to about $4.5 billion from the U.S. Treasury Department for a term of up to five years, which would come on top of the $5 billion it is set to receive from a separate government aid package specifically for its employee payroll.

United did not disclose the terms of the loan, which like the payroll aid will include warrants issued to the U.S. government.

Under the terms of the payroll support, airlines must keep workers employed until Sept. 30, but many, including United, have warned that they will have to downsize in October if demand is not showing signs of recovering.

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