United Airlines (NASDAQ: UAL) cargo revenue shot up 50% in the third quarter to $422 million compared to the same period in 2019, topping the powerful 36% gain it achieved in the previous quarter amid a coronavirus pandemic that has throttled its main passenger business.
The Chicago-based carrier posted an adjusted net loss of $2.4 billion, but said it’s drawing down financial reserves at a lower rate. United’s average daily cash burn was $25 million, which included $4 million of average debt principal payments and severance payments, compared to $40 million in the second quarter with $3 million in finance payments.
United’s second quarter adjusted net loss was $2.6 billion.
United’s earnings, released after the market closed, showed the company reduced total operating costs by 59% versus last year’s third quarter, and by 48% when special charges are excluded.
United has operated more than 6,000 dedicated passenger freighters since mid-March to take advantage of high demand from shippers hungry for airlift since thousands of passenger flights were grounded worldwide. The revenue gains are primarily the result of much higher yields since the amount of actual freight transported is below last year’s total. During the third quarter cargo-ton miles fell 14.8% to 685 million.
But with passenger revenues down 84%, the cargo division’s performance is more critical than ever. Cargo revenue as a percentage of total operating revenue was a robust 25.6%, down slightly from 27.3% last quarter. Nonetheless, it’s a huge leap from cargo’s normal contribution of less than 3%.
Cargo revenue for the first nine months grew 26% to $1.1 billion compared to last year.
“Having successfully executed our initial crisis strategy, we’re ready to turn the page on seven months that have been dedicated to developing and implementing extraordinary and often painful measures, like furloughing 13,000 team members, to survive the worst financial crisis in aviation history,” said United CEO Scott Kirby. “Even though the negative impact of COVID-19 will persist in the near term, we are now focused on positioning the airline for a strong recovery that will allow United to bring our furloughed employees back to work and emerge as the global leader in aviation.”