United Airlines (UAL) has reported first quarter 2020 financial results with a net loss of US$1.7 billion, and an adjusted net loss of US$639 million.
The company's total liquidity as of the close of business on Wednesday, April 29, 2020 was approximately US$9.6 billion, including US$2 billion under its undrawn revolving credit facility. The company currently expects daily cash burn to average between US$40 million and US$45 million during the second quarter of 2020.
United has entered into an agreement to receive approximately US$5.0 billion from the U.S. Treasury Department through the Payroll Support Program under the CARES Act in the form of a US$3.5 billion grant and a US$1.5 billion ten-year loan which will be used to protect the salaries and benefits of employees through Sept. 30, 2020. In connection with this funding, UAL will issue warrants to purchase approximately 4.6 million shares of UAL common stock to the federal government. The first installment of approximately US$2.5 billion was received by United on April 21, 2020 and warrants to purchase approximately 2.3 million shares of UAL common stock were issued.
The company submitted an application to the Loan Program under the CARES Act. Under the Loan Program, the company expects to have the ability through Sept. 30, 2020 to borrow up to approximately US$4.5 billion from the U.S. Treasury Department for a term of up to five years, with any loans issued expected to be senior secured obligations of the company. If the company borrows any amounts under the Loan Program, UAL expects to issue to the U.S. Treasury Department warrants to purchase shares of UAL common stock, with the number of warrants dependent on total borrowings.
