Ual Posts 4 Qtr Results

[ualobserver]

Reuters
United Airlines Parent's Loss Narrows
Tuesday January 27, 1:26 pm ET


CHICAGO (Reuters) - United Airlines parent UAL Corp. (OTC BB:UALAQ.OB - News), operating in bankruptcy, on Tuesday posted a much narrower quarterly loss, cutting the deficit on major cost reductions that took effect last year.
UAL said its fourth-quarter net loss was $476 million, or $4.33 per share, including special items from the bankruptcy. In the year-ago fourth quarter, when UAL filed for Chapter 11 bankruptcy protection, UAL's loss was $1.5 billion, or $20.70 per share.

The world's second-largest airline said its fourth-quarter operating loss was $135 million, compared with the year-ago operating loss of $994 million.

Excluding $225 million in special and reorganization items, UAL said its loss for the quarter was $251 million, or $2.30 per share.

UAL said fourth-quarter unit revenue, or the money taken in per available seat mile flown, rose 10 percent, while a similar cost measure fell 17 percent.

The airline said its cash balance at the end of the quarter was $2.4 billion, including $679 million in restricted cash.

 

[Cosmo]

And if anyone wants to see all of the details of United's 4th quarter and full year financial and operating results, you can view United's press release issued earlier today here.

 

[FWAAA]

The numbers are vastly improved, but where is the operating profit so confidently predicted by Busdrvr??

 

[TravelDude]

In the full press release it shows more significant costs for aircraft rejection.

Does anyone know (I'll even take rumors at this point) what the fleet will look like? What aircaft (types) have been rejected? Aproximate wide body and narrow body fleet size?

Most airline website are updated quarterly with fleet facts, however even before bankruptcy UA refused to do this!

 

[Flying Titan]

Wow. I had the impression that these numbers would be quite a bit better than this. This is surprising to me - UAL still losing more than $5M a day. Even w/o the special items the losses approach $3M a day - unless I read this incorrectly. For those looking for a merger between UAL and another much-discussed troubled carrier, I don't know if there are enough economies of scale to be reached to overcome this kind of imbalance. Between the two of them, we're talking about losses in excess of $6M daily! Not a pretty picture.

 

[Busdrvr]

"The numbers are vastly improved, but where is the operating profit so confidently predicted by Busdrvr??"

Yes, I do deserve to eat the appropriate level of "crow". My amatuer analyst numbers were based on two significantly faulty assumptions, 1. that DEC (with Christmas and all) would be a better month than October. It wasn't. 2. That the monthly filings to the BK court were for just the airline part of UAL. I was estimating revenue to be in the range of 4 billion based on that assumption. I also "assumed" that DEC would be much better YOY (do the imminant filing in Dec 2002). All in all, not bad, but I expected better. Going forward, if UAL can come anywhere near it's post BK CASM numbers, then based on the current RASM figures, look out.

 

[iflyjetz]

Here's a red flag for me. I did not see anywhere where UAL stated that they met DIP covenants for Dec. If UAL missed DIP covenants for Dec, I would wager that UAL misses again in Jan and Feb. Hopefully this won't be a big deal for the lenders; more importantly, let's hope that the ATSB is satisfied with the numbers.

 

[batman]

United is not hedged on fuel and when you consider the latest fuel price surge, it is no wonder that UAL had a large loss.

UAL fuel price 95 cents, Amr is 88 cents and SWA is 74 cents.

IF fuel prices were in the norm (or hedged), United would be close to breakeven.

 

[FWAAA]

Costs are no longer the problem at UAL.

Revenue is the real problem. AMR and DAL saw higher yields for the year, and while UAL's Q4 yield increased, it was still 1.5 cents less than AMR's Q4 yield. Full planes don't equal money in the cash drawer.

UAL's total operating revenue per ASM is also significantly less than AMR's, both for Q4 and the whole year. When UAL solves the revenue gap, it will have a fighting chance for survival. If not, well, there's $2.4 billion in the bank to burn thru.

Good luck, UAL.

 

[UnitedChicago]

They did meet their terms of DIP for December (from the Rocky Mountain News):

"UAL met the strict financial terms of its bankruptcy loans in December, a spokeswoman said."

 

[iflyjetz]

They did meet their terms of DIP for December (from the Rocky Mountain News):

"UAL met the strict financial terms of its bankruptcy loans in December, a spokeswoman said."

United Chicago, thanks. In previous press releases, UAL always emphasized meeting DIP covenants.

 

[ITRADE]

FWAAA raises the Million (or billion dollar question).

How does a full service carrier compete against a low fare carrier????

Most of the majors have managed to get costs down. So, you're now faced with a pure revenue problem. As long as the low-fare guys can offer transcon round trip tickets for $199 and East Coast to Florida tickets for $99, the majors are going to have a very, very difficult time in trying to recover.

 

[UnitedChicago]

No problem ifly - i thought the same thing and was happy to find this in the news.

 

[Doc]

United is not hedged on fuel and when you consider the latest fuel price surge, it is no wonder that UAL had a large loss.

UAL fuel price 95 cents, Amr is 88 cents and SWA is 74 cents.

IF fuel prices were in the norm (or hedged), United would be close to breakeven.

I don't think that is correct this is a lot of cash......

 

[Busdrvr]

"United is not hedged on fuel and when you consider the latest fuel price surge, it is no wonder that UAL had a large loss.
UAL fuel price 95 cents, Amr is 88 cents and SWA is 74 cents.
IF fuel prices were in the norm (or hedged), United would be close to breakeven."

Although UAL would have definately saved with fuel hedging, you can't simply compare airlines on the basis of average fuel price.
UAL pays roughly $0.20 more a GALLON in DEN than AMR does at DFW (taxes). Fuel is typically much cheaper in Europe than the US, giving Eurocentric AMR a "cost advantage". Same goes for landing fee's. DIA charges UAL something on the order of $3.27 per 1000 pounds in landing fees. Landing fee's alone raises the CASM for a COS-den flight by approx $0.03. Meanwhile, DAL pays $1.21 in SLC and approx $0.40 ATL. Greedy government agencies are a large part of UAL's issues....