Posted on: Saturday, February 2,2002
United Airlines parent loses $308 million
| • | Cutting flights didn't help Hawaiian profits |
By Dave Carpenter
Associated Press
CHICAGO — United Airlines' parent company reported a $308 million fourth-quarter loss Friday, capping a calamitous year in which it lost $2.1 billion — a record for any airline.
Staggered by the recession and the aftershocks of the Sept. 11 attacks, UAL Corp. said it burned through about $10 million a day in the fourth quarter. The result was the third-worst quarterly loss ever for the nation's No. 2 carrier, exceeded only by those in the third and first quarters of last year.
But the latest loss was not quite as steep as analysts expected, which the carrier attributed to both cost-cutting and a pickup in air travel. United now plans to add 127 daily flights by April, increasing its schedule about 7 percent.
Elk Grove Village, Ill.-based UAL said the loss for the October-December period amounted to $5.68 per share. It lost $71 million, or $1.40 a share, a year earlier.
Excluding federal aid after the attacks and other special items, UAL lost $640 million, or $11.94 per share. The consensus estimate of analysts surveyed by Thomson Financial/First Call was $14.96 a share.
Revenues plummeted 38 percent to $2.95 billion, down from $4.79 billion a year earlier.
"United, along with the rest of the airline industry, continues to struggle with a weak economy and the aftermath of the Sept. 11 terrorist attacks," said Jack Creighton, who took over as chief executive officer last fall.
The airline said it expects to report another "significant loss" for the current quarter, with January passenger revenue running as much as 17 percent behind a year ago.
Labor issues, president Rono Dutta said in a conference call, could compound its revenue problem. Awaiting approval of the large pay-raise offer it extended to mechanics last month, it also faces further contract talks with its 30,000 ramp workers and customer service employees and is hoping to extract across-the-board concessions from its employees to help its recovery.
"We are committed to implementing a plan that meets the needs of our customers, preserves jobs for our valued employees and positions United on the road to financial stability," Creighton said.
UAL shares fell 80 cents, or 5.4 percent, to $13.90 in midday trading on the New York Stock Exchange and are down more than 50 percent since the attacks.
Merrill Lynch analyst Michael Linenberg said United still has a ways to go in "climbing out of the abyss." But he said recent industry data and the carrier's own numbers suggest continuing improvement. "The loss was huge, but it was better," he said.
As to the possibility of United going bankrupt, as executives of rival airlines have publicly speculated about, Linenberg called chances of a Chapter 11 bankruptcy filing "quite slim," though a restructuring is possible.
"They've got a lot of cash and there's a lot of asset value — several billion dollars' worth of unencumbered aircraft that they could use as collateral to secure more cash."
Company officials declined to comment about the possibility of bankruptcy, saying they are focused on improving revenues and settling labor issues.
For the year, the loss amounted to $40.04 per share versus a profit of $50 million, or 4 cents a share, a year earlier. Excluding government assistance and other special items, the 2001 loss was $1.8 billion.
Revenues for the year were $16.1 billion, down 17 percent from $19.35 billion in 2000.
United already was headed for a record annual loss of $1 billion or more even before the September attacks, hurt by higher costs and a steep falloff in business travel, on which it depends more than other airlines. It laid off 20,000 employees last fall and cut capacity by more than 20 percent, trimming its flight schedule to about 1,650 daily flights from 2,400.
The carrier's previous biggest annual net loss was $957 million in 1992.
The two other biggest U.S. airlines also both recently announced record losses for 2001. American Airlines, the No. 1 carrier, lost $1.8 billion, and No. 3 Delta Air Lines lost $1.2 billion.
Until this year, the record annual loss for any airline was Continental Airlines' $1.24 billion in 1990, according to New York-based BACK Aviation Solutions, which tracks aviation industry data.
Industry losses for the fourth quarter totaled $3.2 billion.
United, which had $2.6 billion cash as of Dec. 31, also announced Friday that it has completed a $775 million private debt financing. The proceeds are largely being used to refinance lease debt on 21 Boeing 737 and Boeing 757 aircraft in its fleet of 543 planes.
