Excellent news! Congrats, UA. Keep up the good work.
http://biz.yahoo.com/prnews/040729/cgth049_1.html
UAL Corporation Reports Second-Quarter Restructuring Progress, Says More Work Needed
Thursday July 29, 12:47 pm ET
Second-Quarter Operating Profit of $7 Million Reflects Significant Improvement of $438 Million Year-Over-Year
Company Reports $77 million Operating Profit on its June Monthly Operating Report
Passenger Unit Revenue Up 10%, Outperforming the Industry
Unit Costs Down 10%; Excluding Fuel, Unit Costs Dip 17%
High Fuel Costs and Soft Yields Driving Need for Further Cost Structure Improvements to Reach Sustainable Profitability
CHICAGO, July 29 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin Board: UALAQ - News), the holding company whose primary subsidiary is United Airlines, today reported its second-quarter 2004 financial results.
UAL's second-quarter operating profit was $7 million, a significant improvement of $438 million over second-quarter results last year. UAL reported a net loss of $247 million, or a loss per basic share of $2.25, which includes $144 million in reorganization items described in the notes to the financial tables. The majority of reorganization charges resulted from non- cash items caused by the rejection of aircraft. Excluding reorganization items, UAL's net loss for the second quarter totaled $103 million, or a loss per basic share of $0.95.
"Despite the challenging environment created by high fuel prices and soft domestic yields, we are focused on driving continuous improvement," said Glenn Tilton, chairman, president and chief executive officer. "We are making progress, but we know there is much work to do. Our business plan must generate the cash flow and liquidity that the financial markets are willing to support. It is clear that we must continue to reduce our overall cost structure if United is to be competitive and achieve sustainable profitability."
In the meantime, UAL's restructuring efforts continue to deliver positive results, outperforming the industry. Tilton cited several of United's achievements in the second quarter:
Increased passenger unit revenue 10% compared to last year, an improvement that outperformed the industry;
Reduced mainline unit costs by 10%. Excluding fuel, unit costs dropped by 17%;
Improved earnings from operations by $438 million over the same quarter a year ago.
As previously reported, UAL has successfully negotiated the expansion of its debtor-in-possession financing to $1 billion on favorable terms and extended the repayment schedule through June 2005, demonstrating that major financial institutions support the company's long-term prospects. Throughout the restructuring, United has consistently acknowledged that the company must adapt to a very difficult, challenging and dynamic marketplace. UAL expects to substantially update its business plan based on feedback from the capital markets as to the appropriate cash flows, coverage ratios and other metrics necessary to support its exit financing package.
Jake Brace, United's executive vice president and chief financial officer, said, "In the second quarter, United's financial performance met our expectations given historically high fuel prices. However, our overall financial performance is still unacceptable. Even though we are experiencing strong traffic -- in June we reported our highest load factor ever -- the pricing environment prohibits us from recouping these high costs."
Financial Results Continue Improvement
The company recorded positive operating cash flow of $62 million for the second quarter. UAL ended the quarter with a strong cash balance of $2.2 billion, including $838 million in restricted cash. UAL's second-quarter 2004 operating revenues were $4 billion, up 30% compared to second quarter 2003. Load factor increased 5 points to 82% as traffic increased 20% on a 13% increase in capacity. In June, load factor reached a record 86%, up 4 points over June 2003. During the second quarter, passenger unit revenue was 10% higher on a 3% yield increase. SARS and the Iraq War contributed to a weak unit revenue performance last year. The recovery from last year, along with route and capacity adjustments, aggressive marketing and sales activities, helped United outperform the industry this year.
Total operating expenses for the quarter were $4 billion, up 14% from the year-ago quarter. Operating expenses per available seat mile decreased 10% from the second quarter 2003. Excluding fuel, operating expenses per available seat mile decreased 17%. Productivity (available seat miles divided by manpower) was up 14% for the quarter year-over-year. Average fuel price for the quarter was $1.18 per gallon (including taxes), up 36% year-over-year.
The company had an effective tax rate of zero for the second quarter, which makes UAL's pre-tax loss the same as its net loss.
Restructuring Progress
This quarter the company began working with a new group of regional air carriers to fly ongoing United Express Service out of Washington Dulles and Chicago O'Hare and, as previously announced, plans to end its relationship with Atlantic Coast Airlines (ACA). United and ACA have reached agreement on a transition of aircraft that began June 3 and will be completed August 4.
During the quarter the company reached an agreement with a coalition representing retirees regarding modifications to retiree medical and life benefits. This agreement, which covers more than 27,000 retirees, combined with the agreement previously announced in May with the Aircraft Mechanics Fraternal Association (AMFA), is expected to deliver cash savings to the company of more than $300 million through 2010.
Operational Performance Among the Best in UAL History
The company continued to deliver outstanding operational performance for the second quarter 2004. Sixty-nine percent of United flights departed exactly on time during the quarter, one percentage point better than the goal set by the company for its new employee incentive program. Customer satisfaction ratings were among the highest the company has received.
Outlook
Booked load factor for August is about the same as last year while September is running ahead of last year. We expect third-quarter system mainline capacity to be up about 7% from last year and fourth-quarter up about 3%. Capacity for 2004 is expected to be about 6% higher than 2003. The company expects fuel price, including taxes, for the third quarter to average $1.23 per gallon.
June Monthly Operating Report
UAL today also filed with the United States Bankruptcy Court its Monthly Operating Report for June. The company posted a $77 million operating profit for June and met its DIP covenants for the month. During June the company made a scheduled DIP repayment of $60 million. In early July, the company made the last of its five scheduled payments to repay its $300 million DIP loan from the former Bank One.
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