United Q1 $542M loss

[Andy]

Cash on hand decreased significantly. Not a good report.

http://biz.yahoo.com/prnews/080422/aqtu012.html?.v=48

CHICAGO, April 22, 2008 /PRNewswire-FirstCall/ -- UAL Corporation (Nasdaq: UAUA - News), the holding company whose primary subsidiary is United Airlines, reported a pre-tax loss of $542 million for the first quarter ended March 31, 2008, $305 million higher than the first quarter of 2007, driven primarily by a $618 million increase in consolidated fuel expense. For the quarter, the company:

-- Reported basic and diluted loss per share (EPS) of $(4.45).
-- Increased mainline passenger unit revenue (or PRASM) by 8.7 percent year-over-year through continued capacity discipline and strong yield management.
-- Continued its focus on controlling costs, with mainline cost per available seat mile (CASM), excluding fuel and special items, for the quarter up 2.4 percent versus 2007. Mainline CASM for the quarter was up 15.9 percent versus the first quarter of 2007, reflecting a 50 percent increase in fuel price.
-- Strengthened its balance sheet by reducing on and off balance sheet debt by $195 million. The company ended the quarter with an unrestricted cash and short-term investments balance of $2.9 billion and restricted cash of $0.7 billion.
-- Announced a plan to reduce 2008 non-fuel costs by an incremental $200 million and to reduce 2008 capital expenditures by $200 million.
-- Acted decisively to reduce mainline domestic capacity by approximately 9 percent by the fourth quarter, on top of a 5 percent reduction in the fourth quarter of 2007.
-- Announced plans to eliminate 30 aircraft from its operating fleet, 10 to 15 more aircraft than initially announced in March.

 

[Rez O. Lewshun]

How much did they pay themselves recently?

 

[Eagle757shark]

This is scary. At the beginning of 2008, everyone was excited about all the hiring and recalls going on around the industry. Now, every airline is suffering huge losses in the first quarter and fuel is steadily rising. I pray this will not be an active Hurricane season. This industry will be reshaped by the end of 2008.

 

[Andy]

How much did they pay themselves recently?

$250M special stock dividend
$110M in profit sharing (went to all employees)

Cash on hand decreased by ~$650M.

 

[pilotgolfer]

As we adjust both our fleet and capacity, we must size the rest of our business accordingly. This will include difficult but necessary steps to reduce our workforce by some 1,100 employees, including 500 management employees, and these will come through a combination of attrition, retirements and furloughs.
In this extraordinarily difficult environment, we recognize the pace of change needs to accelerate, and our actions today reflect just that

Let the furlough games begin!

 

[andyd]

wow, those are some scary numbers....at that rate of cash burn they have a little over 5 months of cash left. none of us are immune from this....it's going to be a long year

 

[Andy]

Let the furlough games begin!

Schweet. I should be done with 757 OE training by the end of June. ~600 from the bottom. What are the odds that I get yanked out of class?

Want liberal leave of absence from UAL? No problem. Take as long as you like.
I'd break into a Tom Bodell/Motel 6 rendition of leaving the light on for you, but I think that they'll be selling the light bulb.

 

[Andy]

wow, those are some scary numbers....at that rate of cash burn they have a little over 5 months of cash left. none of us are immune from this....it's going to be a long year

You can cut the cash burn in half by removing the special dividend and profit sharing. Something tells me that there won't be any profits to share next year. Still, $300M/quarter is >$3M/day. If that keeps up, UAUA will be back in BK in less than a year.

 

[AA717driver]

Andy--I'd say a lot of this was smoke and mirrors if I thought your management gave a $h!t. Good luck. TC

 

[Andy]

Andy--I'd say a lot of this was smoke and mirrors if I thought your management gave a $h!t. Good luck. TC

I'd say the same if cash on hand remained stable. That was a hefty decrease in cash. I did a cursory glance and it looked more like a fire than smoke and mirrors.
CASM ex-fuel and special items was only up by 2.4%; reasonable.
PRASM was up 8.7%.
Fuel costs were up 51.3%.

Oil prices have skyrocketed in April so even with the fare increases, it looks like UAUA will take a heavy hit in the current quarter.

Hard to believe that an ex-oil man could do so poorly on fuel hedges. That's pretty forked up.

 

[Ex737Driver]

Hard to believe that an ex-oil man could do so poorly on fuel hedges. That's pretty forked up.

Yeah, a merger is really gonna help out this situation.:erm:

 

[Violet]

Not looking good for us new hires who just started training last month...really difficult to keep hope alive when the furlough word is being thrown around...it will be an interesting year to say the very least!

 

[ualgrizz]

Well it appears I was a fool to leave AirTran after all. Should have known, approaching 1.5 years again…that seems to be my longevity at U.Andy, you are further up the pole than me. Not sure about the number of new hires. We may be in the same A320 class before pounding the pavement. I am in the UPS pool but that appears bleak as well.

Grizz

 

[9rj9]

for what the UAL pilots gave away, you have to expect a little better than a 500+ million dollar loss. guess it wan't the pilot pay after all, they should have concentrated on hedging fuel.

 

[Andy]

Grizz, good luck to us all. I take it that you're on the 757 now? We had 195 newhires; I hope that they'll be around for a little while. The problem with furloughs this time around is that a lot of the 400 returnees below me are on mil leave/leave of absence. That'll cut through the seniority list MUCH faster than last time around.
My RPT class was supposed to be 9; 3 resigned prior to class.

I would imagine that liberal leaves of absence will be announced shortly.

 

[lowecur]

I don't see CAL merging with UAL with these numbers. They would be like a giant anchor that would pull both carriers into oblivion quicker than you could shake a stick. It would be cheaper to just let them liquidate and buy whatever routes are available for pennies on the dollar. Their only savior would be for the feds to let foreign carriers buy them.....but even that may be a hard sell.

imp:​

 

[luckytohaveajob]

-- Announced a plan to reduce 2008 non-fuel costs by an incremental $200 million and to reduce 2008 capital expenditures by $200 million.
-- Acted decisively to reduce mainline domestic capacity by approximately 9 percent by the fourth quarter, on top of a 5 percent reduction in the fourth quarter of 2007.
-- Announced plans to eliminate 30 aircraft from its operating fleet, 10 to 15 more aircraft than initially announced in March.

Very bad news indeed.

 

[Andy]

It would be cheaper to just let them liquidate and buy whatever routes are available for pennies on the dollar. Their only savior would be for the feds to let foreign carriers buy them.....but even that may be a hard sell.

Wow! That didn't take long for some azzwipe to call for the demise of UAL. That's faster than back in 02/03.
What do you think this industry slowdown is going to do to your precious Embraer stock?

 

[Mr.B]

I'd say the same if cash on hand remained stable. That was a hefty decrease in cash. I did a cursory glance and it looked more like a fire than smoke and mirrors.
CASM ex-fuel and special items was only up by 2.4%; reasonable.
PRASM was up 8.7%.
Fuel costs were up 51.3%.

Oil prices have skyrocketed in April so even with the fare increases, it looks like UAUA will take a heavy hit in the current quarter.

Hard to believe that an ex-oil man could do so poorly on fuel hedges. That's pretty forked up.

An ex-oil man. He can't even get the hedges right. What a complete incompetent.

 

[Hvy]

Well it appears I was a fool to leave AirTran after all. Should have known, approaching 1.5 years again…that seems to be my longevity at U.Andy, you are further up the pole than me. Not sure about the number of new hires. We may be in the same A320 class before pounding the pavement. I am in the UPS pool but that appears bleak as well.

Grizz

You think that Airtran will be here next year? Not too sure I'd take that bet. It's going to be an ugly year for all of us.

 

[ualdriver]

You can cut the cash burn in half by removing the special dividend and profit sharing. Something tells me that there won't be any profits to share next year. Still, $300M/quarter is >$3M/day. If that keeps up, UAUA will be back in BK in less than a year.

Andy-

Where are you getting that cash decreased by 650M as you stated in a previous post? I'm missing that? I'm looking at UAL's Condensed Statements of Consolidated Cash Flows that they just released today, and I'm not seeing a figure resembling that one or even adding up to that figure?

I see that cash/short term investments for the YEAR of MAR 31 2007 to MAR 31 2008 decreased by 445M. I see that total cash (restricted and unrestricted) went down by 573M for the YEAR of MAR 31 2007 to MAR 31 2008. And almost half of those figures was a dividend they didn't even need to pay.

And for the quarter (this quarter), I see that cash went down 250M for that ridiculous dividend payment and 182M for debt repayment and 80M for operations.

So although these results absolutely suck, I'm a little skeptical of your claim that we couuld be in bankruptcy by the end of the year (barring something even worse happening to the industry), considering we have over 2.9B in unrestricted cash and 3B in assets (according to Brace) to borrow against and you're extrapolating that 300M dollars/quarter based on a traditionally weak quarter (1Q) and I assume an unecessary dividend payout.

As you mention, we probably won't be seeing profit sharing, and I would hope(!) that we're not going to see that second 250M dividend distribution. Just those two things alone would have taken a significant chunk out of our negative cash flow.

 

[pipe]

An ex-oil man. He can't even get the hedges right. What a complete incompetent.

The ONLY thing this azzhole does well is pay himself. He does that better than anyone on the planet.

PIPE

 

[Andy]

You think that Airtran will be here next year? Not too sure I'd take that bet. It's going to be an ugly year for all of us.

It's going to be tough times all the way around. Unlike the last downturn, everyone's cutting capacity. No carrier is using this as an opportunity to increase expansion.

 

[PCL_128]

Good luck to everyone at UAL. Things are looking ugly everywhere. I'm not sure that any of us are safe expect for the UPS and FedEx pilots.

 

[Rez O. Lewshun]

Good luck to everyone at UAL. Things are looking ugly everywhere. I'm not sure that any of us are safe expect for the UPS and FedEx pilots.

Aside from the Civ vs Mil debate at Fedex... they are feeling the pinch too....

 

[Andy]

Andy-

Where are you getting that cash decreased by 650M as you stated in a previous post? I'm missing that? I'm looking at UAL's Condensed Statements of Consolidated Cash Flows that they just released today, and I'm not seeing a figure resembling that one or even adding up to that figure?

I see that cash/short term investments for the YEAR of MAR 31 2007 to MAR 31 2008 decreased by 445M. I see that total cash (restricted and unrestricted) went down by 573M for the YEAR of MAR 31 2007 to MAR 31 2008. And almost half of those figures was a dividend they didn't even need to pay.

And for the quarter (this quarter), I see that cash went down 250M for that ridiculous dividend payment and 182M for debt repayment and 80M for operations.

So although these results absolutely suck, I'm a little skeptical of your claim that we couuld be in bankruptcy by the end of the year (barring something even worse happening to the industry), considering we have over 2.9B in unrestricted cash and 3B in assets (according to Brace) to borrow against and you're extrapolating that 300M dollars/quarter based on a traditionally weak quarter (1Q) and I assume an unecessary dividend payout.

As you mention, we probably won't be seeing profit sharing, and I would hope(!) that we're not going to see that second 250M dividend distribution. Just those two things alone would have taken a significant chunk out of our negative cash flow.

End of Q4 cash/equivalents was $3.55B; end of Q1 cash/equivalenets is $2.9B. I didn't pull any numbers apart, so that was first WAG back of envelope.

When we went into BK the last time, $2B was the critical number. Less than that, we couldn't come out the other side.
I know Q1's a weak quarter, but how much has the price of oil risen this quarter?
The unencumbered assets help.
The lack of deliveries help.
The aircraft coming off of lease help. (We could park more than 30 if things get worse).

I backed out the special dividend to come up with $300M. I seriously doubt that there will be a second special dividend. However, I've been wrong in the past and will be wrong in the future.

Those numbers were truly ugly. I don't see posturing for contract negotiations (way too early); every other airline's reporting bad numbers. I don't even think that these were kitchen sink numbers; I think that they were pretty straight up bad.
I'm only ~600 from the bottom so I figure that I'll be gone right after Christmas. I expect the first round of furloughs to occur this fall. Good luck to you and everyone left standing; I hope that they can avoid BK this time around.

 

[Bavarian Chef]

I think it's funny that people are throwing phrases around like "traditionally weak quarter" to defend the latest round of earnings announcements, as if the forecast for the next few is any better.

Let's face it -- they are all gonna be traditionally weak after this year, especially at these fuel prices.

 

[PCL_128]

I'm only ~600 from the bottom so I figure that I'll be gone right after Christmas.

You really think they'll need to furlough more than 600?

 

[Andy]

You really think they'll need to furlough more than 600?

There are some factors to consider with the 600 number. Although I don't know ualdriver's identity, I'm sure that he's been able to figure out mine from my posts on the UAL MEC board - along with any other UAL pilot who's curious (I haven't been secretive of my identity). So the information that I pass here will make it even easier to know who I am.

That 600 isn't really 600, it's more like 400 or less. Why?
We've got 195 newhires; almost all of them will be on the job when furloughed.
It's the other 400 ex-furloughees that is really 200 or so. A lot of them are on mil leave; a lot of them are on leave of absence.
I'm supposed to have a half dozen or so below me on the 757 at my domicile. From what I've seen, I'm the junior guy at my domicile who's not on a leave of absence.

In my RPT (returning pilot training) class, we were supposed to have 9 people. Only 6 showed up; 3 resigned.

I could see them doing an initial cut of 200 or so after summer. I could see the next cut being 400 or so after Christmas, netting an additional 200.

Needless to say, things could turn around quite a bit between now and Christmas. However, the economic data that I'm tracking is telling me that things are going to get worse, not better.

 

[ToiletDuck]

I'm not up on everything regarding this issue but didn't UAL do a poor job in during the CH11 Bk? NWA and DAL restructured while UAL just sat there.