February 24, 2020 / 10:54 PM / in 2 months

United Airlines suspends 2020 guidance on coronavirus uncertainty

FILE PHOTO: A United Airlines passenger jet taxis at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren

(Reuters) - United Airlines Inc (UAL.O) on Monday withdrew its full-year 2020 guidance, citing heightened uncertainty over how the duration and spread of the coronavirus to other regions could impact overall air travel demand.

Chicago-based United was the first U.S. airline to suspend 2020 guidance over the coronavirus outbreak, which caused a global stock market plunge on Monday as a surge of cases outside mainland China sparked fears of a global pandemic.

In a regulatory filing, the company stuck to its forecast for the first quarter thanks to cost savings including lower fuel costs, and said it believes it will be able to deliver earnings growth in 2021.

The company also said if the virus runs its course by mid-May, and normal travel patterns on trans-Pacific routes resume gradually over five months, it would expect to achieve its previous 2020 earnings forecast of between $11 and $13 per share. (bit.ly/38W60Sx)

Near-term demand to China has almost disappeared and demand to the rest of its trans-Pacific routes has dropped by 75%, United said.

U.S. airlines have temporarily canceled flights to China and on Monday were considering issuing travel waiver fees for flights to Italy, where cases spiked over the weekend.

Among U.S. airlines, United is the most at risk for lower passenger traffic from virus fears due to its greater international exposure, CFRA analyst Colin Scarola said in a note to investors.

Roughly 40% of United’s revenues are generated on international flights, versus less than 30% for Delta Air Lines Inc (DAL.N) and American Airlines Group Inc (AAL.O) and just 3% for Southwest Airlines Co (LUV.N), Scarola said.

United shares closed 3.3% lower on Monday, tracking broad airline losses. The stock was down 0.6% at $75 in extended trading.

Reporting by Sanjana Shivdas in Bengaluru and Tracy Rucinski in Chicago; Editing by Shailesh Kuber and Sonya Hepinstall

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