United to post 2nd quarter loss

[AWACoff]

http://biz.yahoo.com/rb/080711/ual.html?.v=2
Reuters
UAL sees second quarter charges near $2.7 billion
Friday July 11, 10:06 am ET

CHICAGO (Reuters) - UAL Corp (NasdaqGS:UAUA - News), parent of United Airlines, said on Friday it plans to take $2.6 billion to $2.7 billion in charges against second-quarter earnings, due to record-high fuel prices and the company's reduced market capitalization.

The parent of the No. 2 U.S. airline said in a filing with the U.S. Securities and Exchange Commission that the bulk of the charges -- $2.2 billion to $2.3 billion -- is due to the writedown of non-cash assets.

"The company has concluded that the entire value of goodwill on its books has to be written off," UAL said in the filing.

The airline industry has been battered by soaring fuel prices. Shares of UAL have fallen about 90 percent so far this year, while the Amex airline index (AMEX:^XAL - News) has shed about 60 percent.

UAL, which will report quarterly earnings on July 22, said last month that it paid an average price of $3.33 per gallon of jet fuel in the second quarter, up $2.08 from the year-ago quarter.

The company, along with all its top rivals, has announced capacity and staff cuts to help offset fuel costs.

In addition to the goodwill charges, UAL expects to record accounting charges $246 million related to the retiring of some B737 planes from the company's fleet, severance charges of $82 million related to job cuts, and other largely non-cash charges of $60 million related to certain projects that have been terminated or indefinitely deferred.

Shares of UAL were down 35 cents in morning trade at $3.82 on Nasdaq.

 

[Dizel8]

I did not see that coming, that is indeed a surprise!

 

[PCL_128]

Any idea what the operating loss was? One-time charges don't really tell a very accurate story.

 

[Colonel Savage]

Any idea what the operating loss was? One-time charges don't really tell a very accurate story.

That was just a statement saying they were going to take the charges when they do report later this month.

 

[GuppyWN]

It's just a heads up to minimize just how bad it's really going to be.

Gup

 

[Draginass]

Sounds like it could be the beginning of the end for UAL.

 

[Hutchman]

Sounds like it could be the beginning of the end for UAL.

Or the end of the beginning.

 

[McNugget]

Sounds like it could be the beginning of the end for UAL.

The sooner the better

 

[Baronman]

The sooner the better

What the.

 

[IADBLRJ41]

other than WN who will make money

 

[Superpilot92]

There will be a few that do.

 

[eaglesview]

The rest of the story

[FONT='Times New Roman','serif']The charges are related to the impairment of goodwill and other intangible assets, aircraft and other tangible assets, as well as severance charges among others. The bulk of these charges are due to non-cash impairment of goodwill expected to be between 2.2 billion and 2.3 billion dollars. [/font]
[FONT='Times New Roman','serif']Goodwill represents the portion of the market value of a business not directly tied to its assets and liabilities and arose for United when we exited bankruptcy on February 1, 2006. Goodwill is intended to be a measure of the "intrinsic value" of the company beyond its tangible assets that have a physical form, like aircraft, buildings and land. Given current market conditions with the price of fuel, and the significant drop in the company's stock market capitalization, the intrinsic value that existed at bankruptcy is significantly reduced.[/font]
[FONT='Times New Roman','serif']These kinds of special charges are an industry issue. We have already seen other airlines, like Delta and Northwest in the first quarter, take similar charges. Delta's charge was 6.1 billion dollars and Northwest's was 3.9 billion dollars. In addition, American has disclosed that they expect to take an impairment charge of between 1.1 billion and 1.2 billion dollars in the second quarter, as well as a severance charge of approximately 70 million dollars. Also, based on an earlier disclosure, we believe that Continental will also disclose impairment and severance charges on Friday. [/font]
[FONT='Times New Roman','serif']We expect we will continue to see similar non-cash accounting charges in future quarters related to our ongoing capacity reductions, including fleet and plant, property and equipment charges, and severance costs, although the charges will be smaller and timing of those charges is yet to be determined.[/font]

I thought the RED ink was appropriate.

 

[jonjuan]

There will be a few that do.

Like who?

 

[Colonel Savage]

"I thought the RED ink was appropriate."

Excellent choice, sir. Might I suggest the green eye shades to compliment them, along with the brass lamp and roll top desk.

 

[Dizel8]

Like who?

Allegiant probably will, seem to be running a good ship!