United Airlines' parent reports record $1.77 billion quarterly loss
Monday, October 31st 2005, 11:28 am
By: News On 6
CHICAGO (AP) _ The holding company for United Airlines reported a record third-quarter net loss of $1.77 billion Monday, citing the heavy costs of restructuring its aircraft leases as it nears the completion of its three-year bankruptcy overhaul.
UAL Corp. characterized the $1.7 billion in non-cash aircraft restructuring costs as ``common'' for a company in the final stages of a Chapter 11 reorganization and said it had operating earnings of $165 million for the period despite higher fuel expenses.
Nonetheless, it was the company's 21st consecutive quarter in the red and topped its previous biggest loss of $1.47 billion for the fourth quarter of 2002, when it filed for bankruptcy.
The net loss for the July-through-September period amounted to $15.26 per share and compared with a loss of $274 million, or $2.38 per share, a year earlier.
Operating revenues rose 8.1 percent to $4.7 billion from $4.3 billion.
The Elk Grove Village, Ill.-based company said the aircraft restructuring charges were based on its creditors' claims and are expected to be settled for a fraction of those amounts. It said it therefore expects to record a large gain when it exits bankruptcy early next year.
Excluding the total of $1.8 billion in restructuring costs for the period, UAL said it would have had a net profit of $68 million. Operating earnings were $245 million better than the result from the third quarter of 2004, it said.
``The results we are reporting make it clear that we have done well this quarter in overall cost control, especially given the significant reduction in capacity,'' said Glenn Tilton, United's chairman, CEO and president. United has been in Chapter 11 bankruptcy since December 2002. It is forecasting a profit next year for the first time since 2000, although that is based on a business plan that envisions crude-oil prices averaging $50 a barrel _ more than $10 below the current level.
The company has lost $14.2 billion since last turning a profit in the second quarter of 2000, including $9 billion since entering bankruptcy.
Chief Financial Officer Jake Brace said the company's restructuring is now largely complete.
``Third-quarter results are strong, despite a $405 million impact from higher fuel prices year-over-year,'' he said.
The lease restructuring costs made United's net loss by far the largest of any U.S. airline to report third-quarter results, exceeding Northwest Airlines Corp.'s $475 million deficit. The parent firms of three carriers _ Southwest Airlines, Alaska Airlines and Continental Airlines _ all turned profits while American Airlines parent AMR Corp. had a $153 million loss.
Still to report are Delta Air Lines Inc. and US Airways Group Inc., which now includes the former America West. Both are scheduled to release results Nov. 9.
For the first nine months of 2005, UAL reported a net loss of $4.3 billion, or $36.82 per share, compared with a loss a year earlier of $980 million, or $8.77 per share. Nine-month revenues increased 4.8 percent to $13 billion from $12.4 billion.