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$510 Million 1st quarter loss UAL

A1FlyBoy

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CHICAGO –– United Airlines parent UAL Corp. reported a $510 million first-quarter loss Friday, its second-biggest setback ever, reflecting its continued struggles to lure back business travelers in a skittish economy.

The quarterly loss was the seventh in a row for the nation's second-biggest carrier, exceeded only by the $1.16 billion loss in last year's third quarter, when the terrorist attacks threw the airline industry into crisis. Passenger revenues tumbled 28 percent, largely due to schedule cutbacks made last fall.

But results showed some signs of improvement. The operating loss was significantly smaller than expected, more seats were filled than in the fourth quarter and the airline burned through cash at about $5 million a day – about half its rate in the previous quarter.

The net loss amounted to $9.22 a share, compared with a loss a year earlier of $313 million, or $5.97 a share.

Excluding special items, United said the operating loss was $487 million or $8.81 per share, beating the $10.24 consensus estimate by analysts surveyed by Thomson Financial/First Call.

UAL shares rose 21 cents to $15.05 in morning trading on the New York Stock Exchange, though they retain only half their value from before the Sept. 11 attacks.

Operating revenues were $3.3 billion, down 26 percent from $4.4 billion a year ago.

Chief executive officer Jack Creighton said the Elk Grove Village, Ill.-based airline was making progress in its recovery, although he acknowledged that complications with labor contract negotiations have blocked efforts to cut salary and further reduce high operating costs.

The loss was exceeded only by the $575 million lost by AMR Corp., parent of industry leader American Airlines. All major carriers but Southwest Airlines finished in the red for the quarter.

"We certainly are seeing signs that our industry's situation is beginning to improve, but there still is a long way to go," Creighton said.

After posting its five biggest losses ever in the last five quarters, the company said it expects to report a "significant" second-quarter loss in addition to a loss for the full year.

Creighton has scheduled a meeting with the airline's union leaders next week to address the labor situation, chief financial officer Jake Brace said on a conference call.

UAL hasn't decided whether to file for a government loan, Brace said. The deadline for applying is at the end of June.

Special items for the quarter totaled $23 million. A $52 million charge for the closing of business-jet unit Avolar was partly offset by a gain of $29 million related to the sale of Cendant shares.

United has gone into steep descent for a number of reasons since last turning a profit in the second quarter of 2000: its failed merger with U.S. Airways, labor turmoil, high costs, the sinking economy and the attacks, all of which drove off the high-paying business travelers it depends on more than other carriers.

The company lost an industry-record $2.1 billion last year. Analysts expect another whopping loss this year, albeit a smaller one; they are forecasting an operating loss of $20.44 a share, compared with last year's $33.23.
 

Delta3

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Wow, how long can they keep this up?

I wonder if they will go the way Pan Am did.
 

flydog

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Even if UAL were to declare Chapter 11 it would be a positive thing for their long term recovery allowing them to get creditors off their back. I doubt they would make a decision to liquidate the company like Pan Am did. If UAL were to close up shop it would cause a major disruption of air travel and I doubt the feds would let that happen.
 

Boeingman

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flydog said:
If UAL were to close up shop it would cause a major disruption of air travel and I doubt the feds would let that happen.

People said the same thing about EAL, BNF and PAA. The government bailouts are only going to go so far before the taxpayers say enough.

The financial pressure on some of these companies is going to force either a shutdown or another round of consolidation.

I am fortunate to have a business on the side. I really feel for these guys on furlough. Some may never be able to return to the career they love.

A very sad situation.
 

FlyingSig

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flydog said:
Even if UAL were to declare Chapter 11 it would be a positive thing for their long term recovery allowing them to get creditors off their back. I doubt they would make a decision to liquidate the company like Pan Am did. If UAL were to close up shop it would cause a major disruption of air travel and I doubt the feds would let that happen.


Positive for UAL, but them going Ch 11 would put DAL, CAL, AMR and everyone else in bankruptcy as well. You want to see a ravaged industry, watch what happens if one of the big 3 gets to play without having to pay its bills..... Crazy Creighton's fare sale, we're just giving away tickets.
 

Zarathustra

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Look at the numbers. American lost more and has less cash on hand. They'd be the first to go, but: None of the top 4 will go bankrupt.
 

nimtz

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Look at the numbers. American lost more and has less cash on hand. They'd be the first to go, but: None of the top 4 will go bankrupt.

Dude someone must of slept through finance class! Hope you were drunk or high when you wrote this down!
 
C

Chas

???

If I am not mistaken Delta lost around 380 mill without a single casualty loss on 9/11 ???If one falls I think they all are gonna topple . Better all pray that they do not but I am expecting all to pull through!!
 

bayoubandit

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This came from Forbes magazine. It reflects the numbers at 2001 years end. The burn rate is how much longer each would be in business using years end 2001 numbers. Since the numbers are better now, these burn forcasts are different I would imagine. It shows UAL would have 14 months of cash on hand.




Cash plus Short Term Investments 2001 ($billion)
AMR: $3.0
Continental: $1.1
Delta: $2.2
Northwest: $2.6
Southwest: $2.3
UAL: $2.6
USAirways: $1.1


Earnings before Deductions for Taxes or Depreciation for 2001 ($millions)
AMR: ($1,287)
Continental: $ 361
Delta: ($ 729)
Northwest: ($ 547)
Southwest: $ 922
UAL: ($2,259)
USAirways: ($1,527)


Burn Rate
AMR: 28 months
Continental: Positive pretax cash profits 2001
Delta: 36 months
Northwest: 57 months
Southwest: Positive pretax cash profits 2001
UAL: 14 months
USAirways: 8 months


Debt/Capital
AMR: 54%
Continental: 78%
Delta: 67%
Northwest: 110%
Southwest: 24%
UAL: 69%
USAirways: 391%


Long Term Debt Due in the Next 5 Years ($billions)
AMR: $2.7
Continental: $2.0
Delta: $3.2
Northwest: $2.7
Southwest: $0.5
UAL: $3.1
USAirways: $1.4


Average Age of Aircraft
AMR: 10.8
Continental: 6.5
Delta: 9.6
Northwest: 20.0
Southwest: 8.4
UAL: 10.0
USAirways: 10.6
 
Last edited:

Zarathustra

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First Quarter 2002:

Net loss:
UAL $510 mil vs. AMR $575 mil

Operating loss:
UAL $711 mil vs. AMR $729 mil

Cash on hand 3/31:
UAL $2.9 bil vs AMR $2.3 bil

Operating expense per asm:
UAL 11.41 vs AMR 11.30

Winter 2001 had major paper write downs on aircraft valuations (over 1 billion). It is disingenuous, at best, to predicate assumptions using immaterial data for projections.

Daily cash burns for both UAL and AMR were less than 5 million per day for the quarter, significantly less in March.

UAL March Revenues down only 9% year over year.
 

Clownpilot

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Too funny

Zarathustra said:
Look at the numbers. American lost more and has less cash on hand. They'd be the first to go, but: None of the top 4 will go bankrupt.

American would be the first to go, huh????

LOL.

Apparently, you don't understand anything about the airline industry. Burn rates tell only part of the story. There is far more to the picture. AA is considered by most analysts to be the airline in the best position to take advantage of the recovery period. Look at things like debt to equity. If you don't have equity in your assets you have nothing to borrow with and your credit is severely affected. Cash on hand is one, equity is another, then there's potential earnings based on route structures and business models, loan rates, primary and secondary etc revenue streams, and finally the biggy, market share. Market share is the primary indicator of how well an airline can recover in any given area. Look at what AA is doing in New York right now and you will get an idea of where they are planning to concentrate their efforts. You have no idea what you're talking about and I think everybody here knows it but you.
 

m-dog

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Clownpilot wrote:
"You have no idea what you're talking about and I think everybody here knows it but you."

Ahhh.... speak for yourself. I'm not sure you or anyone for that matter has all the answers. The New York shuttle market is being raped by the Amtrak bullet train service, so those doing the most in that market are losing the most to surface transportation and Jet Blue for the longer segments.
 

Clownpilot

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I wasnt talking about shuttle service. AA is not a player in that market. The New York market is being expanded primarily internationally. The money there is in providing service from the worlds largest financial market to the world's other major financially critical cities. Big planes. Not $69 shuttle service. You're stuck in the puddle jumper mentality because that's what you know. Think bigger.

Trains, I like trains too. Choo choooooooooooo.




m-dog said:
Clownpilot wrote:
"You have no idea what you're talking about and I think everybody here knows it but you."

Ahhh.... speak for yourself. I'm not sure you or anyone for that matter has all the answers. The New York shuttle market is being raped by the Amtrak bullet train service, so those doing the most in that market are losing the most to surface transportation and Jet Blue for the longer segments.
 

Boeingman

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Clownpilot said:
I wasnt talking about shuttle service. AA is not a player in that market. The New York market is being expanded primarily internationally. The money there is in providing service from the worlds largest financial market to the world's other major financially critical cities. Big planes. Not $69 shuttle service. You're stuck in the puddle jumper mentality because that's what you know. Think bigger.

Trains, I like trains too. Choo choooooooooooo.





There is a comment about UAL in this article, which does not sound to good to me. But Zara must be wearing those colored shades to hide from the truth. (probably wears them inside the airports as well)

http://www.usaviation.com/nm/anmviewer.asp?a=191&z=8
 
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