United Airlines (UAL 1.59%) reported a $1.6 billion loss in its second quarter, with operating revenue down 87.1% due to operating capacity having decreased 87.8% compared with 2019. It expects flight schedule capacity in the third quarter to be about 35% of what it was in the third quarter of 2019. That's in line with a previous announcement that it would be at 30% capacity in July and would be adding flights for August to get to 40% of August 2019 levels.
The airline continues to burn through cash at a rate of $40 million per day; but with reduced operating costs, it expects to average about $25 million in daily cash burn for the third quarter. Rival Delta Air Lines recently said in its quarterly earnings report that it had reduced its daily cash burn rate to $27 million in June 2020.
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United said it had total liquidity of $15.2 billion as of July 20, 2020, and that it expects to end the third quarter at over $18 billion in liquidity. The company has already raised $16.1 billion in financing since the start of the COVID-19 crisis through debt offerings, issuing stock, receiving aid through the CARES Act, and other items.
Cash preservation actions have included entering into a sale-leaseback program for new aircraft scheduled for delivery in 2020, in addition to cutting capital spending. It now says it plans on capital expenditures for the year to be about $3.7 billion. In May 2020, it had expected to spend under $4.5 billion.
United also announced an expansion of its mask-wearing policy, saying it will require face coverings in all the airports it serves, including service counters, United Clubs, gates, and baggage claim areas.
