After markets closed Thursday, United Airlines Holdings (NASDAQ:UAL) reported a first-quarter loss of $1.7 billion, becoming the latest airline to update investors on the toll the COVID-19 pandemic is taking on its business.

United reported an adjusted loss of $2.57 per share on revenue of $7.98 billion, compared to analyst expectations for a $3.47 per share loss on revenue of $8.22 billion. Revenue was down 16.8% year over year, and the company's operating margin fell to a negative 12.2% from 5.2% in the first quarter of 2019.

A United 787 leaving the hangar at night.

Image source: United Airlines.

Airline investors went into earnings season bracing for the worst, with the pandemic affecting travel in Asia mid-quarter and spreading globally in the months that followed. United is the U.S. mainland airline most exposed to Asia, and was sure to take a hit, but the initial market response to the quarter was a sigh of relief.

If things are not as bad as feared at United, is it safe for investors to buy in?

Cash is king

United had been enjoying a resurgence heading into 2020, with its stock up more than 580% in the previous decade thanks to a successful turnaround that has allowed it to streamline costs, improve its ticket pricing, and increase margins.

That has all changed with the pandemic, and the focus is now entirely on survival. United's total liquidity as of close of business April 29 was $9.6 billion, including $2 billion in undrawn funds under its revolving credit facility. The airline said it expects to burn though about $40 million to $45 million in cash per day in the second quarter.

American Airlines Group, by comparison, reported earlier in the day Thursday that it expects to burn through an average of about $70 million per day in the current quarter, with hopes to have that rate down to $50 million per day by the end of June. American anticipates having $11 billion in cash at the end of the June quarter.

When will traffic return?

United has been among the most blunt of the U.S. carriers in emphasizing that the airline, and the industry, might have to shrink drastically in the quarters to come, warning employees in late March that furloughs are inevitable if traffic does not return by fall.

The entire industry expects travel to be slow through the end of the second quarter, and few are expecting a rebound until late in the summer at the earliest. United made it clear that it is already drawing up contingency plans for what happens if demand has not improved by October.

Should travel not return, United said it would need to act to bring cash burn down to below $20 million per day. On the post-earnings call with investors, company president Scott Kirby, who is slated to become CEO this month, said all levers, including layoffs, further cost cuts and route reductions, or even hub closures, would be in play if the airline felt its survival was at stake.

"There are no sacred cows. Our responsibility to our employees, our customers and our shareholders is to make sure that United is here for the long haul and provides as many good jobs as possible to our people," Kirby said. "That is my number one and overriding objective for everything that we do."

Is United a buy?

CEO Oscar Munoz, on the post-earnings call with investors, summed up the predicament the entire industry is facing.

"It is certain that demand will return," Munoz said. "Unfortunately, we just don't know when. No one does."

United management deserves a lot of credit for its transparency and candor with both employees and investors during this crisis. Times are tough, and there is little management can do to stimulate demand while the pandemic rages and should a recession follow. I believe in Munoz and Kirby, and I'm willing to bet the company will find a way to avoid filing for bankruptcy in all but the worst of scenarios.

LUV Chart

Airline year to date data by YCharts

That said, it's growing increasingly clear that the airlines face a multi-year recovery. United's strengths, including Asia travel, the energy markets via its Houston hub, and tech via San Francisco, could all take longer than the overall economy to recover. And the airline, for all the progress it has made in transforming its business, is still not as well positioned as Delta Air Lines or Southwest Airlines to weather the storm.

Shares of United are down 69% year to date. But shares of Delta, which faces a clearer path to recovery, are down almost 60%. I like what United is doing, but given the risk and the length of the turnaround ahead, I'd prefer sticking to top names instead of buying in here.