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Dec 2, 2001
CHICAGO (Reuters) - UAL Corp. (NYSE:UAL - news), parent of No. 2 U.S. carrier United Airlines, on Friday reported a first-quarter net loss of $510 million, capping a horrid week of airline losses as traffic stubbornly remains lower since the Sept. 11 attacks, particularly business travel.

Revenues for Elk Grove Village, Illinois-based UAL plunged 26 percent to $3.29 billion from $4.42 billion a year earlier.

The airline was still burning through $5 million in cash a day, but that's half the amount of its $10 million in daily cash burn during the fourth quarter. United said it had nearly $3 billion in cash on hand.

But labor issues at United have hampered a new chief executive's plans to get the airline back in the black. Its stock remains 50 percent below levels posted before the Sept. 11 attacks on New York and Washington. UAL shares closed on Thursday on the New York Stock Exchange at $14.84, down 3.6 percent.

UAL's $510 million net loss was slightly less than the $575 million shortfall posted by rival AMR Corp. (NYSE:AMR - news), parent of American Airlines, earlier this week. Except for Southwest Airlines Co. (NYSE:LUV - news), all top carriers have reported significant losses as traffic remains below normal levels.

``While the loss was huge, it was better than both our $10.00 loss per share forecast and the consensus loss of $10.24 per share,'' said Michael Linenberg, analyst at Merrill Lynch.

Trying to regain financial altitude, airlines in the last week have tried to raise fares. American on Thursday filed for $20 round-trip increases, resurrecting a similar attempt by Continental Airlines (NYSE:CAL - news) last week, which failed to stick.


After narrowly avoiding a strike by mechanics in March, United is still trying to hammer out a deal with other union employees including ramp and customer service workers.

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

``However, complications with negotiating open labor contracts have impeded our progress on reducing salary and other operating costs,'' Creighton said.

Creighton took the helm late last year after his predecessor, James Goodwin, was ousted following a public-relations disaster. Goodwin said in a letter to employees that the airline would perish unless losses stopped. Unions, particularly the International Association of Machinists, called for his resignation.

Going forward, the carrier plans to ask workers for billions of dollars in concessions as UAL looks to reverse the steep losses from 2001.

UAL reported a net loss of $9.22 a share in the first quarter after posting an industry-record loss of $2.1 billion for all of 2001. The first-quarter loss compared with a smaller one of $313 million, or $5.97 cents a share, in the first quarter of last year.

Excluding certain items, such as a $52 million charge for shutting down the Avolar fractional business jet venture, UAL's loss was $487 million, or $8.81 per share.

Analysts' estimates ranged from a loss of $9.50 per share to a loss of $11.44, with a mean loss of $10.24, according to market research firm Thomson Financial/First Call.

United received a $464 million federal tax refund on March 20 due to tax law changes included in an economic stimulus package signed by President Bush in March.

UAL pulled the plug on its business jet unit, Avolar, in March as well, after it failed to find an investor to take a majority stake in the business.

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