Sounds like UAL still has 9 lives.... The same old BS - Iraq war and SARS have hurt - but we are making progress with labor costs.... No mention about how bad SARS could impact UAL in the coming months as it continues to mutate and spread (UAL used to subsidize its other operations with its once-lucrative Asian and European routes...).
With a $1.3 Billion (capital "B") loss in the first quarter (just 90 days), what are the creditors thinking? I am frankly surprised they have not acted sooner.... What is the status on the UAL LCC (Starfish)? My question is - does UAL have a plan besides paying pilots and others (excluding executives) less in the future????????????????????
UAL loses $1.3 billion in first quarter
By Jennifer Waters & August Cole, CBS.MarketWatch.com
Last Update: 4:44 PM ET May 2, 2003
CHICAGO (CBS.MW) -- UAL Corp., the parent of United Airlines, fell another $1.3 billion into the red for the first quarter as the No. 2 carrier reported the deepest losses in the industry, according to results released Friday.
UAL's loss eclipsed what had been the airline industry's largest loss -- $1.04 billion, turned in by AMR Corp. (AMR: news, chart, profile).
UAL, which filed for the largest bankruptcy in aviation history in December, also ended the March period with $1.6 billion in cash.
Red ink notwithstanding, shares of UAL (UALAQ: news, chart, profile) rose 8 cents, or 6.3 percent, to $1.27. The entire airline sector was in rally mode after an upgrade from Merrill Lynch lifted many major carriers. See Airline Stocks.
Like its competitors, UAL noted that the conflict in Iraq and higher fuel prices eroded quarterly results, yielding a loss of $14.16 a share compared with a loss of $510 million, or $9.22 a share, in the same period last year.
Fuel costs came to $751 million in the quarter, a 44 percent increase over last year. United doesn't have hedging protection against price swings in aviation fuel. AMR's American Airlines, by comparison, had $729 million in fuel costs, a 38 percent increase.
This year's results for UAL also included $385 million in charges -- $248 million for reorganization costs and $137 million related to a write down of the company's investment in and guarantee of debt for troubled Air Canada, which has also filed for bankruptcy.
Operating revenue dropped to $3.18 billion from $3.29 billion in the prior year's first quarter, UAL said.
United, which expects capacity to be lower than previously announced, also said it has seen some improvement in trans-Atlantic bookings.
United said it has been burning through $2 million a day, but this would have been $4 million without drawing down $92 million in debtor-in-possession financing. United also recorded a $365 million IRS tax refund.
'Substantial progress'
"The first quarter was particularly difficult, given traveler concerns about the conflict in Iraq, the weak economy and a fierce low-fare environment, as well as speculation about our company's future -- speculation that is now abating," said Chief Executive Glenn Tilton in a statement.
"While much work needs to be done, United has made substantial progress putting its house in order, most importantly through the achievement of consensual wage and work-rule agreements with all of its unions and the rapid implementation of non-labor cost savings," he added.
On Wednesday, the company got U.S. bankruptcy court approval for labor cost cuts totaling $2.56 billion annually over the next six years. Despite that progress, near-term hurdles remain.
"Loss of revenue on Pacific routes from passenger concerns over the SARS virus and the continuing risk of a breach of covenant in two debtor-in-possession facilities remain risks," noted Philip Baggaley, credit analyst at Standard & Poor's.
Larger liquidity concerns are still an issue, Baggaley noted. If United's monthly financial performance figures don't meet the standard set by its lenders while in bankruptcy, he said the banks backing the debtor-in-possession financing could disrupt the carrier's access to that money. The result could be liquidation.
However, he said recent progress on the labor side and indications that demand for air travel is returning gives the carrier some flexibility with lenders.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
August Cole is spot news editor at CBS.MarketWatch.com in Chicago
With a $1.3 Billion (capital "B") loss in the first quarter (just 90 days), what are the creditors thinking? I am frankly surprised they have not acted sooner.... What is the status on the UAL LCC (Starfish)? My question is - does UAL have a plan besides paying pilots and others (excluding executives) less in the future????????????????????
UAL loses $1.3 billion in first quarter
By Jennifer Waters & August Cole, CBS.MarketWatch.com
Last Update: 4:44 PM ET May 2, 2003
CHICAGO (CBS.MW) -- UAL Corp., the parent of United Airlines, fell another $1.3 billion into the red for the first quarter as the No. 2 carrier reported the deepest losses in the industry, according to results released Friday.
UAL's loss eclipsed what had been the airline industry's largest loss -- $1.04 billion, turned in by AMR Corp. (AMR: news, chart, profile).
UAL, which filed for the largest bankruptcy in aviation history in December, also ended the March period with $1.6 billion in cash.
Red ink notwithstanding, shares of UAL (UALAQ: news, chart, profile) rose 8 cents, or 6.3 percent, to $1.27. The entire airline sector was in rally mode after an upgrade from Merrill Lynch lifted many major carriers. See Airline Stocks.
Like its competitors, UAL noted that the conflict in Iraq and higher fuel prices eroded quarterly results, yielding a loss of $14.16 a share compared with a loss of $510 million, or $9.22 a share, in the same period last year.
Fuel costs came to $751 million in the quarter, a 44 percent increase over last year. United doesn't have hedging protection against price swings in aviation fuel. AMR's American Airlines, by comparison, had $729 million in fuel costs, a 38 percent increase.
This year's results for UAL also included $385 million in charges -- $248 million for reorganization costs and $137 million related to a write down of the company's investment in and guarantee of debt for troubled Air Canada, which has also filed for bankruptcy.
Operating revenue dropped to $3.18 billion from $3.29 billion in the prior year's first quarter, UAL said.
United, which expects capacity to be lower than previously announced, also said it has seen some improvement in trans-Atlantic bookings.
United said it has been burning through $2 million a day, but this would have been $4 million without drawing down $92 million in debtor-in-possession financing. United also recorded a $365 million IRS tax refund.
'Substantial progress'
"The first quarter was particularly difficult, given traveler concerns about the conflict in Iraq, the weak economy and a fierce low-fare environment, as well as speculation about our company's future -- speculation that is now abating," said Chief Executive Glenn Tilton in a statement.
"While much work needs to be done, United has made substantial progress putting its house in order, most importantly through the achievement of consensual wage and work-rule agreements with all of its unions and the rapid implementation of non-labor cost savings," he added.
On Wednesday, the company got U.S. bankruptcy court approval for labor cost cuts totaling $2.56 billion annually over the next six years. Despite that progress, near-term hurdles remain.
"Loss of revenue on Pacific routes from passenger concerns over the SARS virus and the continuing risk of a breach of covenant in two debtor-in-possession facilities remain risks," noted Philip Baggaley, credit analyst at Standard & Poor's.
Larger liquidity concerns are still an issue, Baggaley noted. If United's monthly financial performance figures don't meet the standard set by its lenders while in bankruptcy, he said the banks backing the debtor-in-possession financing could disrupt the carrier's access to that money. The result could be liquidation.
However, he said recent progress on the labor side and indications that demand for air travel is returning gives the carrier some flexibility with lenders.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
August Cole is spot news editor at CBS.MarketWatch.com in Chicago
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