UAL posts 4th-quarter loss but beats forecast

Sean1999 Ram Air TA · 02-01-2002, 12:32 PM

UAL posts 4th-quarter loss but beats forecast
(UPDATE: Adds stock activity, comments from conference call)

By Kathy Fieweger

CHICAGO, Feb 1 (Reuters) - UAL Corp. (NYSE:UAL - news), the No. 2 U.S. carrier and parent of United Airlines, on Friday posted a fourth-quarter loss that mushroomed from a year ago, joining the parade of airlines hurt by Sept. 11 fallout, although it beat expectations even as revenues plunged after the attacks.
ADVERTISEMENT

UAL reported a net loss of $308 million, compared with a net loss of $71 million a year ago. Before special items like federal cash aid that followed the attacks on the United States, the company lost $640 million. Revenues tumbled by 40 percent.

The airline also forecast an unspecified ``significant loss'' in the first quarter, despite some encouraging trends.

The top eight U.S. airlines have now posted a combined fourth-quarter net loss of $3.2 billion, including a $64 million profit at trend-bucking Southwest Airlines Co. (NYSE:LUV - news).

Shares of UAL were down 4 percent in morning New York Stock Exchange trading, shedding 62 cents to $14.08, about half their pre-attack level.

In a conference call with analysts, United said it has a high enough proportion of business travelers, but the fares they are paying are too low.

President Rono Dutta said yields for business travel, a measure of fares after accounting for corporate and other discounts, are down about 20 percent.

Weak business travel has been a problem for airlines for some time now, hurting them even before the suicide hijackings of four jetliners hurled the industry into a historic crisis.

SOUNDING THE WARNING BELL

UAL Chief Financial Officer Jake Brace said unresolved labor contracts with mechanics and other ground workers, represented by the International Association of Machinists, have been an impediment to turning the airline around.

Going forward, he said, United is seeking to adjust workers' salaries, which were ``set at a different time.''

``I think labor is very realistic,'' Brace said. ``We all know additional sacrifices need to be made.''

Labor costs account for 38 percent of total expenses, among the highest in the industry.

Despite speculation in the industry that the carrier will have to file for bankruptcy protection unless it gets wage or work-rule concessions, executives steadfastly refused to comment on that possibility.

Brace said repeatedly that the airline is focused on a financial recovery plan that includes reductions in labor costs. United has talked to each of its unions and their financial advisers but has not yet asked for specific reductions, he said. However, he said ``several billion'' dollars' worth of concessions would be needed to make a recovery plan work.

UAL's net loss per share in the quarter was $5.68, compared with $1.40 per share a year earlier. Still, before special items its per-share loss was $11.74, narrower than Wall Street expectations.

The items included $261 million cash from the $15 billion federal airline bailout package and a gain on the sale of investments in travel services and residential real estate firm Cendant Corp. (NYSE:CD - news).

Revenues in the quarter fell to $2.9 billion from $4.8 billion.

``While our financial results this quarter reflect a decline in both business and leisure travel, during the fourth quarter we saw signs that air travel is slowly beginning to recover,'' Chairman and Chief Executive Jack Creighton said in a statement. Creighton took over in October after the previous CEO, James Goodwin, was ousted when machinists complained about his statement the airline would ``perish'' unless losses stopped.

BEATING THE CONSENSUS

Michael Linenberg, an analyst at Merrill Lynch, said the results showed United Airlines was climbing out of the abyss.

``While the loss was huge, the results were much better than our $16.00 loss forecast and the consensus loss of $14.96,'' he said. ``On balance, we are encouraged by the results.''

United will add 127 daily departures to its April schedule, mirroring a restoration of some flights at other carriers like rival AMR Corp. (NYSE:AMR - news), parent of American Airlines and TWA.

United said its booked load factor, or percentage of seats filled, for February is ahead of last year, but March is flat.

United is currently trying to work out agreements with some 15,000 IAM-represented mechanics and 30,000 other ground workers, some of whom have voted to strike.

A specially appointed presidential board recently told the airline it should offer mechanics raises of up to 37 percent, and UAL accepted the deal.

Mechanics will vote on the proposals on Feb. 12, and negotiations with other unionized employees resume on Feb. 11.

UAL said its daily cash burn rate in the first quarter was about $10 million, and it ended the quarter with a cash balance of $2.6 billion.

The airline also said it completed a $775 million private debt financing, with the money largely dedicated to refinancing lease debt on 21 Boeing (NYSE:BA - news) 737 and 757 jets. The airline ended the year with 543 aircraft.

Travelin' Man · 02-01-2002, 12:45 PM

But beats forecast

So what - should they get an award?

Only in Wall Street can a major quarterly loss be turned into good news. Fact is this airline is losing money and is still run piss poor by management. They should be ashamed of their poor performance.

Headline should read -

UAL suffers huge quarterly losses - Dutta resignes, employees rejoice!

Wingman · 02-01-2002, 03:11 PM

I am just wondering when UAL is going to sell its LHR and NRT routes.

Travelin' Man · 02-01-2002, 07:27 PM

Quote:

Originally posted by Wingman
I am just wondering when UAL is going to sell its LHR and NRT routes.

Never

Wingman · 02-01-2002, 07:40 PM

Funny, thats what Pan Am used to say.

UALsprtofSEA2 · 02-03-2002, 05:29 AM

Quote:

Originally posted by Travelin' Man
But beats forecast

They should be ashamed of their poor performance.

Headline should read -

UAL suffers huge quarterly losses - Dutta resignes, employees rejoice!

I like the way you think T-man!

Scott

UALsprtofSEA2 · 02-03-2002, 05:39 AM

Wingman,

What UAL hasn't done yet is get out of White Plains. The flights from ORD go out with hardly anything, but they(UAL) still keep the route. Same with the flights from ORD to DFW. Very little of anything on the planes, but they still fly there.

On the other hand they(UAL) stop flying to Norfolk and Raliegh Durham from Chicago when the flights always went out heavy.
What the hell are those people thinking. I guess these are some of the reasons why the company is having problems.

Also, why does United Airlines have three times as many vice-presidents than American Airlines when AA is much larger?

Does anyone have a answer to that one????????/

Scott

02-01-2002, 12:32 PM	#1
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	UAL posts 4th-quarter loss but beats forecast UAL posts 4th-quarter loss but beats forecast (UPDATE: Adds stock activity, comments from conference call) By Kathy Fieweger CHICAGO, Feb 1 (Reuters) - UAL Corp. (NYSE:UAL - news), the No. 2 U.S. carrier and parent of United Airlines, on Friday posted a fourth-quarter loss that mushroomed from a year ago, joining the parade of airlines hurt by Sept. 11 fallout, although it beat expectations even as revenues plunged after the attacks. ADVERTISEMENT UAL reported a net loss of $308 million, compared with a net loss of $71 million a year ago. Before special items like federal cash aid that followed the attacks on the United States, the company lost $640 million. Revenues tumbled by 40 percent. The airline also forecast an unspecified ``significant loss'' in the first quarter, despite some encouraging trends. The top eight U.S. airlines have now posted a combined fourth-quarter net loss of $3.2 billion, including a $64 million profit at trend-bucking Southwest Airlines Co. (NYSE:LUV - news). Shares of UAL were down 4 percent in morning New York Stock Exchange trading, shedding 62 cents to $14.08, about half their pre-attack level. In a conference call with analysts, United said it has a high enough proportion of business travelers, but the fares they are paying are too low. President Rono Dutta said yields for business travel, a measure of fares after accounting for corporate and other discounts, are down about 20 percent. Weak business travel has been a problem for airlines for some time now, hurting them even before the suicide hijackings of four jetliners hurled the industry into a historic crisis. SOUNDING THE WARNING BELL UAL Chief Financial Officer Jake Brace said unresolved labor contracts with mechanics and other ground workers, represented by the International Association of Machinists, have been an impediment to turning the airline around. Going forward, he said, United is seeking to adjust workers' salaries, which were ``set at a different time.'' ``I think labor is very realistic,'' Brace said. ``We all know additional sacrifices need to be made.'' Labor costs account for 38 percent of total expenses, among the highest in the industry. Despite speculation in the industry that the carrier will have to file for bankruptcy protection unless it gets wage or work-rule concessions, executives steadfastly refused to comment on that possibility. Brace said repeatedly that the airline is focused on a financial recovery plan that includes reductions in labor costs. United has talked to each of its unions and their financial advisers but has not yet asked for specific reductions, he said. However, he said ``several billion'' dollars' worth of concessions would be needed to make a recovery plan work. UAL's net loss per share in the quarter was $5.68, compared with $1.40 per share a year earlier. Still, before special items its per-share loss was $11.74, narrower than Wall Street expectations. The items included $261 million cash from the $15 billion federal airline bailout package and a gain on the sale of investments in travel services and residential real estate firm Cendant Corp. (NYSE:CD - news). Revenues in the quarter fell to $2.9 billion from $4.8 billion. ``While our financial results this quarter reflect a decline in both business and leisure travel, during the fourth quarter we saw signs that air travel is slowly beginning to recover,'' Chairman and Chief Executive Jack Creighton said in a statement. Creighton took over in October after the previous CEO, James Goodwin, was ousted when machinists complained about his statement the airline would ``perish'' unless losses stopped. BEATING THE CONSENSUS Michael Linenberg, an analyst at Merrill Lynch, said the results showed United Airlines was climbing out of the abyss. ``While the loss was huge, the results were much better than our $16.00 loss forecast and the consensus loss of $14.96,'' he said. ``On balance, we are encouraged by the results.'' United will add 127 daily departures to its April schedule, mirroring a restoration of some flights at other carriers like rival AMR Corp. (NYSE:AMR - news), parent of American Airlines and TWA. United said its booked load factor, or percentage of seats filled, for February is ahead of last year, but March is flat. United is currently trying to work out agreements with some 15,000 IAM-represented mechanics and 30,000 other ground workers, some of whom have voted to strike. A specially appointed presidential board recently told the airline it should offer mechanics raises of up to 37 percent, and UAL accepted the deal. Mechanics will vote on the proposals on Feb. 12, and negotiations with other unionized employees resume on Feb. 11. UAL said its daily cash burn rate in the first quarter was about $10 million, and it ended the quarter with a cash balance of $2.6 billion. The airline also said it completed a $775 million private debt financing, with the money largely dedicated to refinancing lease debt on 21 Boeing (NYSE:BA - news) 737 and 757 jets. The airline ended the year with 543 aircraft.

Thread Tools
Show Printable Version Email this Page
Rate This Thread
Rate This Thread:

02-01-2002, 12:45 PM	#2
Travelin' Man Insane Collector Join Date: May 2000 Location: Aspen USA!!! Posts: 1,919	But beats forecast So what - should they get an award? Only in Wall Street can a major quarterly loss be turned into good news. Fact is this airline is losing money and is still run piss poor by management. They should be ashamed of their poor performance. Headline should read - UAL suffers huge quarterly losses - Dutta resignes, employees rejoice!

02-01-2002, 03:11 PM	#3
Wingman Registered User Join Date: Aug 2000 Location: Bangor, ME Age: 34 Posts: 429	I am just wondering when UAL is going to sell its LHR and NRT routes.

02-01-2002, 07:40 PM	#5
Wingman Registered User Join Date: Aug 2000 Location: Bangor, ME Age: 34 Posts: 429	Funny, thats what Pan Am used to say.

02-03-2002, 05:39 AM	#7
UALsprtofSEA2 Master Collector Join Date: May 2000 Location: Chicago Age: 45 Posts: 895	Wingman, What UAL hasn't done yet is get out of White Plains. The flights from ORD go out with hardly anything, but they(UAL) still keep the route. Same with the flights from ORD to DFW. Very little of anything on the planes, but they still fly there. On the other hand they(UAL) stop flying to Norfolk and Raliegh Durham from Chicago when the flights always went out heavy. What the hell are those people thinking. I guess these are some of the reasons why the company is having problems. Also, why does United Airlines have three times as many vice-presidents than American Airlines when AA is much larger? Does anyone have a answer to that one????????/ Scott