United CFO says financial impact of Covid was worse than worst-case-scenario  

22 January 2021:

Companies and analysts routinely model how they would fare should a disaster occur, stress testing to see how they would react to formulate a plan — just in case.

In United Airlines’ (UAL) earnings call Thursday, the company showed just how flawed some of these models can be.

Outlining the company’s losses — an adjusted pretax loss of $2.6 billion for a full-year loss of $9.9 billion — CFO Gerald Laderman pointed out that things were worse than they had imagined. The stock fell around 7% on the earnings announcement.

“Before COVID, we modeled our worst-case scenarios based on the financial impact of 9/11, followed by a recession,” Laderman said on the call. “It turns out we weren't even close.”

Scott J. Kirby, the CEO, said on the call that one of the airline’s significant accomplishments was “being the first airline to recognize the potential severity of COVID-19,” but it was in a tough spot as it tried to minimize cash burn when passengers stopped flying.

Though there is a light at the end of the tunnel, Kirby said the pandemic has changed airlines forever.

“As we recover from this crisis, we've stopped using the term ‘return to normal’ because it creates an environment where it's just too easy to go back to doing what we were doing before,” he said. “Instead, we want to focus on a return-to-new approach that applies to a wide variety of goals. When this is over, our employees, customers, the general public and shareholders will see a new United Airlines.”

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Source: Yahoo Finance

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