Posted on: Friday, June 25, 2004

United blames jet fuel costs for net loss in May of $93M

By Dave Carpenter
Associated Press

CHICAGO — United Airlines said in a bankruptcy court filing yesterday that it posted a net loss of $93 million in May — its efforts to return to profitability complicated by near-record jet fuel costs.

The nation's No. 2 carrier, which is seeking an additional $500 million in financing after trimming its request for federal assistance, pointed to a $9 million operating profit for the month as evidence its restructuring work is paying off.

"Our cost-reduction and revenue-generation efforts are delivering results and making United a stronger, more competitive airline as we continue to move forward," chief financial officer Jake Brace said.

But CEO Glenn Tilton cautioned employees in a separate message that more cuts will be needed to cope with increased competitive pressures and soaring fuel expenditures, reiterating that United will have to "dig deeper" on costs.

"We are going to have to maintain a relentless focus on cost improvement," Tilton said on a company hot line Wednesday evening, without specifically mentioning further concessions by workers. "United has to continue to meet the demands of a competitive marketplace, and cost reduction is going to continue to be a major part of everything that we do."

May results included a 7 percent increase in passenger revenue from the same month a year earlier and was an improvement of $164 million over May 2003 operating costs. They also included $58 million in reorganization expenses, such as breaking aircraft leases as part of a fleet overhaul, United said.

Tilton confirmed the company asked the Air Transportation Stabilization Board on Tuesday to guarantee $1.1 billion of its $2 billion in conditional bank loans — down from $1.6 billion previously and $1.8 billion in 2002. He did not indicate when United expects to hear from the federal panel on its third and presumably last bid to take advantage of the loan guarantees.