United sinks as airline keeps mum on travel rebound’s timing

United Airlines Holdings Inc. sank after failing to forecast when a demand rebound would improve results, about a week after Delta Air Lines Inc. said a profit was in reach by the third quarter.

This year will serve as a “transition” after the collapse in travel demand because of the coronavirus pandemic, United said as it reported fourth-quarter earnings. Chief Executive Officer Scott Kirby declined to put a timetable on when passenger loads would pick up, instead touting United’s goal of topping pre-pandemic profit margins in 2023.

“Nobody, including us, has a crystal ball,” Kirby said Thursday in a conference call with analysts. “Whether we reach an inflection point in the spring, the summer or the fall, what we know is that a recovery is coming.”

The CEO’s long-term focus underscored the bleak outlook for the coming months as the coronavirus pandemic continues to gut travel demand. Delta offered specific goal posts last week, reiterating its expectation of breaking even on a cash-flow basis in the second quarter and telling investors that it had a “good shot” at turning a third-quarter profit as vaccines become more widely available.

United slid 6.2% to $42.38 at 11:07 a.m. in New York, the biggest drop on the S&P 500 Index. Other airlines fell less sharply as President Joe Biden prepared additional travel-safety measures during the coronavirus pandemic. The administration plans to require people to wear masks in airports and on planes while enforcing quarantines for passengers arriving in the U.S. from other countries.

‘Inflection Point’

In the fourth quarter, United swung to an adjusted loss of $7 a share, 35 cents worse than the average of analyst estimates compiled by Bloomberg. For all of 2020, United lost $27.57 a share, the largest shortfall in its 94-year history.

First-quarter operating revenue will fall as much as 70%, the company said, slightly worse than the drop of up to 65% that Delta projected. Looking ahead, United said it has identified $1.4 billion in permanent cost cuts, getting it more than halfway to its goal of $2 billion.

The Chicago-based company said customers are eager to travel as Covid-19 vaccines take hold. United sees an “inflection point” in consumers’ readiness to travel, Chief Commercial Officer Andrew Nocella said.