United Airlines revenues up in July

By Dave Carpenter
Associated Press

CHICAGO — United Airlines remained unprofitable last month but said it earned $35 million from operations as improving revenues helped keep its bankruptcy reorganization on track.

The world's No. 2 carrier reported a net loss of $112 million in announcing results yesterday for July, its eighth month in Chapter 11 bankruptcy. The company said its financial performance met the requirements of its bankruptcy lenders and that it's on pace to meet them for August as well.

Excluding $105 million in reorganization expenses, mostly attributed to the rejection of costly aircraft leases, United said the net loss was $7 million.

Systemwide unit revenue increased 10 percent over July 2002 and was well ahead of the industry average for the month, according to the Elk Grove Village, Ill.-based airline.

Cash balance — a category that analysts watch closely as an indicator of financial health — rose $48 million for the month to $2.3 billion, including $714 million restricted cash.

"United is continuing to deliver major cost reductions and is now coupling that effort with significant unit revenue improvement," said Jake Brace, chief financial officer. "As we continue to successfully bring down cost and improve revenue, we are building the momentum to emerge from Chapter 11 as a much more focused, efficient and flexible business for the long term."

Based on its target of a spring 2004 emergence from Chapter 11, the airline is roughly halfway through an overhaul it began Dec. 9 with the largest bankruptcy filing in aviation history.

But the success of its reorganization isn't assured. The airline industry, while gradually recovering, is still weak. Even $300 million in government aid couldn't prevent United from posting a $623 million second-quarter loss — its 12th straight deficit.

Under a strict timetable, its debtor-in-possession lenders require United to show a profit in bankruptcy by Oct. 31 or risk losing its financing.

"They, like the other U.S. airlines, are seeing a gradual pickup in revenues," said Philip Baggaley, airline analyst for Standard & Poor's Corp. "They're also getting more and more the benefit of employee concessions" from a new labor contract that took effect May 1.

United's stock, which was delisted earlier this year by the New York Stock Exchange, rose 11 cents to close at 74 cents a share on the Over the Counter Bulletin Board.