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United Airlines posts $1.4B net loss on big charges
AFX
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SAN FRANCISCO (AFX) -- Bankrupt UAL Corp., parent of United Airlines, reported the airline industry's widest net losses yet Thursday for the second quarter after $1.39 billion in charges -- more red ink than Northwest Airlines and Delta Air Lines combined.
For the second quarter, UAL's net losses hit $1.43 billion, or $12.33 a share, wider than the year-ago net loss of $247 million, or $2.25 a share.
The results include $1.39 billion in items, most of which were non-cash charges, tied to the company's pension plan default as well as rejected contracts and aircraft. More charges are expected in the third quarter as the company closes in on the end of a more than two-year stint in bankruptcy, the company said.
Revenue in the quarter totaled $4.42 billion, up 5.6% from last year.
The Chicago-area airline said that on an operating basis it earned $48 million in the quarter, up from $7 million last year, as cutbacks and savings in bankruptcy paid off.
On that basis, United said it counts itself in exclusive company among the network carriers. 'Of the major network carriers, only three -- ourselves, American and Continental -- reported an operating profit this quarter,' said UAL Chief Executive Officer Glenn Tilton in a message to employees on Thursday.
Delta Air Lines , which is fighting to avoid filing for bankruptcy, reported a net loss of $382 million on July 21 and Northwest Airlines turned in a $225 million net loss on July 26.
While United's labor costs fell 13% in the second quarter to $1.05 billion, jet fuel costs increased almost 38% to $955 million. United said it paid 45% more for a gallon of jet fuel in the second quarter for an average price of $1.71.
The cash balance at the end of the quarter totaled $2.6 billion, with unrestricted cash rising $295 million to $1.7 billion.
Looking to the third quarter, United said that it expects overall capacity throughout its system to come down by 5% and fuel prices to rise to $1.83 a gallon. Fuel hedges cover 6.5% of the airline's consumption at an average price of $1.29 a gallon.
For the year, capacity will be pared back by 3%.
This story was supplied by MarketWatch. For further information see www.marketwatch.com.
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