United Airlines to offer 25.3mn shares to raise $1bn

United Airlines Holdings plans to offer 25,322,567 shares of unsold common stock, it announced in a November 23 stock exchange filing. At current prices, this would boost its cash reserves by raising just over USD1 billion in fresh equity. The decision to offer shares is a controversial one for investors as it dilutes those held by existing holders. Still, airlines continue to struggle as they try to ride out the pandemic until a vaccine arrives. United Airlines (UA, Chicago O’Hare) revealed on November 19 that it had seen a rise in cancellations and a decline in bookings for the week ending November 18, before the traditionally busy travel week of Thanksgiving. It blamed the trend on the recent spike in Covid-19 cases in the United States. The carrier forecasts that total revenue will be about 67% lower in the fourth quarter of 2020 than it was a year earlier. It burned about USD25 million per day on average during the third quarter, ending the period with USD19.4 billion in total liquidity. Recent vaccine news has raised United’s share price, which is up 20% so far in November but still down by more than 50% since the start of the year, according to investment advisory firm The Motley Fool. The carrier follows American Airlines (AA, Dallas/Fort Worth) in taking advantage of the recent rally to raise fresh capital. As previously reported, American Airlines Group announced on November 10 a public offering of 38.5 million shares, seeking to raise about USD500 million. Separately, United Airlines has announced plans to return the B737 MAX to service in the first quarter of 2021. It said in a statement that its MAX fleet “won’t return to service until we have completed more than 1,000 hours of work on every aircraft, including FAA-mandated changes to the flight software, additional pilot training, multiple test flights, and meticulous technical analysis to ensure the planes are ready to fly.” United CEO Scott Kirby assured that passengers concerned about flying with the MAX will be allowed to change their plans and that the aircraft “will not be used in unexpected aircraft changes,” the Chicago Business Journal reported. United Airlines had fourteen B737-9s delivered before the March 2019 grounding, according to the ch-aviation fleets advanced module, and has a further twenty-nine -9s, fourteen B737-8s, and 128 B737-10s on order.