Ual 4th Quarter Results

Discussion in 'United Airlines' started by Dizel8, Jan 27, 2005.

  1. Dizel8

    Dizel8 Senior

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    UAL posted a net loss of $664 million, or $5.73 per share, compared with a loss of $476 million, or $4.33 per share, a year earlier.

    A consensus forecast among three Wall Street analysts was for a loss of $5.20 per share for the No. 2 U.S. carrier, according to Reuters Estimates.

    "Record fuel prices and pressure on revenue led to unacceptable results," said United Chief Executive Glenn Tilton in a statement. "United has made good progress with more cost reductions already under way. But as we have said, and as this quarter shows without question, we have more work to do."

    The carrier said fuel expenses rose 58 percent in the quarter, to $842 million.

    Excluding special items, UAL's loss for the quarter was $553 million, or a $4.77 loss per share. Special items included a gain of $158 million from the sale of UAL's remaining shares of online travel agency Orbitz, $222 million in reorganization expenses, and a $47 million increase in frequent flyer liability.

    Revenue was $4 billion, up from $3.8 billion a year earlier.

    "Weak yields and high fuel prices are the key chief culprits," said Ray Neidl, airline analyst at Calyon Securities "It still needs a lot of work."

    Neidl said the airline needs to step up its cost-cutting efforts, particularly its labor costs.

    The Elk Grove Village, Illinois-based airline, which has been in bankruptcy for more than two years, is seeking to cut costs and reorganize into a leaner operation. It is seeking $725 million in annual savings from its labor force.

    Those cuts are on top of $2.5 billion in givebacks negotiated earlier with the same unions. United has reached tentative labor deals with five of its six unions and continues to negotiate pension issues.

    Jake Brace, United's chief financial officer, said the carrier must terminate and replace all of its pension plans in order to exit Chapter 11.
     
  2. Borescope

    Borescope Veteran

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    Get ready here it come again. They have to keep up with USAirways :shock: BOHICA :mf_boff:
     
  3. gatemech

    gatemech Senior

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    We haven't finished round 2 yet. I see round 3 coming by April. Maybe it is time to clean house on the management rooster.
     
  4. The Gopher

    The Gopher Advanced

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    I can tell you at WHQ it's getting pretty sour. The theory is that labor costs are so low, particularly at USAir, that the blame any loss now is squarely placed on management. Unfortunately for them, they had to cut to the bone to figure that out. However for us, it is signaling that the method of cutting our way to profitability is a dead-end, and that non-labor costs and dare we say it, GROWTH, will be the path out of the hole.

    I can tell you that every nickel is being squeezed as far as it will go. Heck, this is the coldest winter inside WHQ that I've experienced, I think they turned down the heat.
     
  5. spacewaitress

    spacewaitress Senior

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    664 million this quarter!? That's about the value of the cuts they want. I dont' see how we can survive.
     
  6. jimntx

    jimntx Veteran

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    Well, obviously fuel costs at all the legacy airlines are a direct result of "out of control" labor costs. Maybe if we all just brought a gallon of Jet-A with us to work each day and donated it at the door... :lol:

    The thing that really gets my goat is that management at all the other legacies conveniently ignore the fact that CO has managed to go over 3 years past 9/11 before asking the employees for concessions. CO's management thought the better course of action would be to cut costs everywhere else to the extent possible before asking employees for cuts. What a concept!
     
  7. uafa21

    uafa21 Advanced

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    I don't see how cutting our wages by $725,000,000 is going to solve the company losing $1,600,000,000 for the year. This next year will even be more challenging than last. Oil prices will likely remain above the $40 barrel all year. Ticket prices are being driven down and competition seems to be increasing.

    I voted no on this second round, what will they want to take away on round three? Health insurance, flight benefits, double bunking for pilots and f/a's, more pay? It will be interesting.

    I just wish my resume' looked better.
     
  8. SVQLBA

    SVQLBA Senior

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    Strip out the increase in fuel costs and the results were just as bad as Q4 2003. UA is making precious little progress on productivity with its obsession on labor rates. Aircraft utilization and gate utilization are still well below B6, WN, even AA levels. Ted (whatever else you think of it) has shown you can operate reliably with tighter turn times etc., but there's no sign of the lessons and practices getting read over to mainline. AA, CO, and UA all have similar avg stage lengths (1250 - 1350 miles), yet UA's CASM was 10.68, compared to 10.25 for AA and 9.98 for CO. Never mind the still unclosed gap to B6 (CASM of 6.32 at an almost identical stage length).

    The fact that US is still clinging to a banked hub structure is not good either.

    At least cargo's doing well, but with no growth in the widebody fleet (a little bit in widebody ASMs) it's difficult to see them repeating 30% revenue growth next year.

    Any word on how p.s. is doing? Future plans for Ted? Who will replace Air Wisconsin?

    Heck, any word on what UA's strategy is going forward?
     
  9. enilria

    enilria Advanced

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    You want some real fun!

    Notice not a peep about December results specifically. Subtract the operating and cash totals for the quarter from the October/November releases and you will see UA lost over $220m in just December. Further cash decreased by something like $240m just between Nov.30 and Dec.31.

    There was no explanation in their report as to why cash fell so much in just one month. Both of the excuses (AMFA lump payment, profit sharing payment) mentioned had already been used in the October and November monthly filings.

    December was clearly a catastrophe.

    And the Simplifares kicked in a couple weeks later...and fuel went back up to old highs.

    Anyone for another 25% pay cut?
     
  10. Borescope

    Borescope Veteran

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    We've been looking for this answer going on three years now :shock:
     
  11. coolflyingfool

    coolflyingfool Veteran

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    I noticed that UA's revenue was up for the 4th quarter by $200 MM. That is definitely a positive sign. If expenses fall a little more and revenue can climb a little more, there is light at the end of the tunnel. Just my thoughts...........
     
  12. casual rat

    casual rat Senior

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    I wonder when we'll see the emergence of tiltonmustgo.com? He's making the 'buffoonish' Goodwin seem like a genius....Bracemustgo.com is another consideration as well. These guys are amazing.
     
  13. uafa21

    uafa21 Advanced

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    Ua's January results have been published. We lost $326M of that $151 M was the operating loss.

    Could another paycut be in the horizon?

    I know January is typically a month that is hard to make money in. We gave a paycut for most of the month. Management did not seem to anticipate a loss for the month. There may be 4 banks lined up to give Ua a loan. They won't stay lined up long with this kind of results though.
     
  14. FWAAA

    FWAAA Veteran

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    With a cash burn of about $108 million in Jan, unrestricted cash fell to about $1.145 billion.

    With fuel prices heading skyward again, that cash won't last long if these trends continue.
     
  15. uafa21

    uafa21 Advanced

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    It won't take long. Management has to control cash and losses. Fuel is spiking again above the $50 per barrel range. Loads seem a little lighter on the domestic side.

    There does need to be some reaction instead of no action. We gave anywhere from a 9.8% -14% paycuts plus some other cuts as well. It looks as though we could work for nothing and still this company would lose money. I think we have way too many assets that are not making the proper return. Those assets need to be either eliminated or made to generate revenue. We are in BK and we can dump unneccessary/unprofitable assets.

    There is a way to stop the losses and turn this puppy around, just not with present management. They don't know how to run an airline. Tilton may laugh and say that Dal cutting fares will only cost UA $200-$500M , hell we can't afford to lose that right now, besides it will cost more. And the llc's are not shrinking either. It use to be that Ua could ride out the ride and force another airline out or have them cut their service. Those days are over. We may have driven f9 out of some markets with ted, at the same time other markets have had fares driven down as well costing Ua millions.
     

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