United shares drop after company announces fresh stock offering as coronavirus drives travel demand to 'essentially zero'

KEY POINTS

• United is planning to sell more than 39 million shares, worth slightly more than $1 billion at Tuesday's close.
• The airline's shares are down nearly 70% this year but the airline is seeking to raise money to battle the impact on the virus.
• U.S. airlines this week started receiving portions of $25 billion in federal grants and loans to keep paying workers through Sept. 30.

A United Airlines Boeing 787 Dreamliner sits parked at the terminal at San Francisco International Airport in San Francisco, California.

Justin Sullivan | Getty Images

United shares fell close to 2% in extended trading after the airline said it's planning a fresh stock offering, the latest measure by a carrier to raise money as the coronavirus devastates travel demand. Shares 

The Chicago-based carrier said it is planning to sell 39.25 million shares, which would be worth slightly more than $1 billion at Tuesday's closing price of $27.88. 

United's shares are down nearly 70% this year, and the new offering highlights the lengths airlines are going to to raise money as the pandemic continues to sap revenue. The airline's competitors have also tumbled by a similar amount this year as the disease and measures to stop it from spreading kept passengers home.

"Travel demand is essentially zero and shows no sign of improving in the near-term," United's CEO Oscar Munoz and its president, Scott Kirby, who takes the reins next month, told employees last week.

The airline on Monday disclosed that a $2.1 billion loss in the first quarter of the year, its largest since 2008. The carrier and its competitors are scheduled to report full quarterly earnings in the coming days.