CHICAGO, June 15, 2020 /PRNewswire/ -- United
Airlines (NASDAQ: UAL) today announced that it expects to have
total available liquidity of approximately $17 billion at the end of the third quarter of
2020.[1] This dollar amount reflects committed financing of
$5 billion to be secured by the
airline's loyalty program, MileagePlus, that allows the
airline to continue to operate, evolve, and grow the program, as
well as $4.5 billion expected to be
available to United through the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act") Loan Program. The company
believes it has sufficient slots, gates and routes collateral
available to meet the collateral coverage that may be required for
the full $4.5 billion available to
the company under the Loan Program. This $9.5 billion of additional liquidity will provide
even more flexibility as the airline navigates the most disruptive
financial crisis in the history of aviation.
Given the impact COVID-19 has had on travel demand, United has
spent the past several months aggressively and proactively cutting
costs. The airline has already reduced planned capital expenditures
and operating and vendor expenditures, suspended raises and
implemented an unpaid time off program for management and
administrative employees, put a freeze on hiring, introduced
voluntary leave and separation programs, reduced pay for all
executives and cut its CEO and President's base salaries by 100%,
among other cost-saving measures. United expects an average cash
burn of approximately $40 million per
day in the second quarter of 2020 and to reduce its average cash
burn to approximately $30 million per
day in the third quarter of 2020.[2]
Goldman Sachs Lending Partners LLC, Barclays Bank PLC and Morgan
Stanley Senior Funding, Inc. have committed to provide, and have
agreed to arrange the syndication of, the MileagePlus financing
through a term loan facility, which is expected to close, subject
to standard conditions precedent, by the end of July 2020. Goldman Sachs Lending Partners LLC
will act as the sole structuring agent and lead left arranger for
the transaction.
MileagePlus has more than 100 million members, over 100
program partners, and is an essential asset for United. The program
has historically generated material and stable revenues and free
cash flows, drives customer retention, and increases customer
lifetime value. United continues to invest in making MileagePlus
the top loyalty program for its members. Last year the airline
announced that MileagePlus miles never expire and announced a
partnership with CLEAR to offer free and discounted memberships to
MileagePlus members. United also introduced PlusPoints, a new
industry-leading upgrade benefit for Premier members.
About United
United's shared purpose is "Connecting People. Uniting the
World." For more information, visit united.com, follow @United on
Twitter and Instagram or connect on Facebook. The common stock of
United's parent, United Airlines Holdings, Inc., is traded on the
Nasdaq under the symbol "UAL".
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Certain statements in this release
are forward-looking and thus reflect the Company's current
expectations and beliefs with respect to certain current and future
events and anticipated financial and operating performance. Such
forward-looking statements are and will be subject to many risks
and uncertainties relating to the Company's operations and business
environment that may cause actual results to differ materially from
any future results expressed or implied in such forward-looking
statements. Words such as "expects," "will," "plans,"
"anticipates," "indicates," "remains," "believes," "estimates,"
"forecast," "guidance," "outlook," "goals," "targets" and similar
expressions are intended to identify forward-looking statements.
Additionally, forward-looking statements include statements that do
not relate solely to historical facts, such as statements which
identify uncertainties or trends, discuss the possible future
effects of current known trends or uncertainties, or which indicate
that the future effects of known trends or uncertainties cannot be
predicted, guaranteed or assured. All forward-looking statements in
this release are based upon information available to the Company on
the date of this release. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events, changed circumstances
or otherwise, except as required by applicable law.
The Company's actual results could differ materially from these
forward-looking statements due to numerous factors including,
without limitation, the following: the duration and spread of the
ongoing global COVID-19 pandemic and the outbreak of any other
disease or similar public health threat and the impact on the
business, results of operations and financial condition of the
Company; the risk that the MileagePlus financing is not completed;
the lenders' ability to accelerate the MileagePlus indebtedness,
foreclose upon the collateral securing the MileagePlus indebtedness
or exercise other remedies if the Company is not able to comply
with the covenants in the MileagePlus financing agreement; the
final terms of borrowing pursuant to the Loan Program under
the CARES Act, if any, and the effects of the grant and promissory
note through the Payroll Support Program under the CARES Act; the
costs and availability of financing; the Company's significant
amount of financial leverage from fixed obligations and ability to
seek additional liquidity and maintain adequate liquidity; the
Company's ability to comply with the terms of its various financing
arrangements; the material disruption of the Company's strategic
operating plan as a result of the COVID-19 pandemic and the
Company's ability to execute its strategic operating plans in the
long term; general economic conditions (including interest rates,
foreign currency exchange rates, investment or credit market
conditions, crude oil prices, costs of aircraft fuel and energy
refining capacity in relevant markets); risks of doing business
globally, including instability and political developments that may
impact its operations in certain countries; demand for travel and
the impact that global economic and political conditions have on
customer travel patterns; the Company's capacity decisions and the
capacity decisions of its competitors; competitive pressures on
pricing and on demand; changes in aircraft fuel prices; disruptions
in the Company's supply of aircraft fuel; the Company's ability to
cost-effectively hedge against increases in the price of aircraft
fuel, if it decides to do so; the effects of any technology
failures, cybersecurity or significant data breaches; disruptions
to services provided by third-party service providers; potential
reputational or other impact from adverse events involving the
Company's aircraft or operations, the aircraft or operations of its
regional carriers or its code share partners or the aircraft or
operations of another airline; the Company's ability to attract and
retain customers; the effects of any terrorist attacks,
international hostilities or other security events, or the fear of
such events; the mandatory grounding of aircraft in the Company's
fleet; disruptions to the Company's regional network as a result of
the COVID-19 pandemic or otherwise; the impact of regulatory,
investigative and legal proceedings and legal compliance risks; the
success of the Company's investments in other airlines, including
in other parts of the world, which involve significant challenges
and risks, particularly given the impact of the COVID-19 pandemic;
industry consolidation or changes in airline alliances; the ability
of other air carriers with whom the Company has alliances or
partnerships to provide the services contemplated by the respective
arrangements with such carriers; costs associated with any
modification or termination of the Company's aircraft orders;
disruptions in the availability of aircraft, parts or support from
its suppliers; the Company's ability to maintain satisfactory labor
relations and the results of any collective bargaining agreement
process with its union groups; any disruptions to operations due to
any potential actions by the Company's labor groups; labor costs;
the impact of any management changes; extended interruptions or
disruptions in service at major airports where the Company
operates; U.S. or foreign governmental legislation, regulation and
other actions (including Open Skies agreements, environmental
regulations and the United
Kingdom's withdrawal from the European Union); the
seasonality of the airline industry; weather conditions; the costs
and availability of aviation and other insurance; the Company's
ability to realize the full value of its intangible assets and
long-lived assets; any impact to the Company's reputation or brand
image and other risks and uncertainties set forth under Part I,
Item 1A., "Risk Factors," of the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
2019, as updated by the Company's Quarterly Report on Form
10-Q for the quarter ended March 31,
2020 and the Company's Current Report on Form 8-K filed
June 15, 2020, as well as other risks
and uncertainties set forth from time to time in the reports it
files with the SEC.
1 Includes liquidity available under the company's
$2 billion revolving credit facility,
$5 billion of committed financing to
be secured by the company's loyalty program, MileagePlus, as well
as $4.5 billion expected to be
available to the company through the CARES Act Loan Program.
2 "Cash burn" is defined as net cash from operations,
less investing and financing activities. Proceeds from the issuance
of new debt (excluding expected aircraft financing), government
grants associated with the Payroll Support Program of the CARES Act
and any new issuances of UAL common stock are not included in this
figure.
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SOURCE United Airlines