United Airlines Posts $1.3 Billion Loss

[ualflynhi]

If we dont start at least get this bleeding under control and start
making some money we are finished.To much capacity not enough demand.


CHICAGO (Reuters) - United Airlines parent UAL Corp. on Friday posted a $1.3 billion quarterly loss as the war in Iraq hurt travel demand and raised fuel costs in the first months of the air carrier''s bankruptcy restructuring.

UAL (OTC BB:UALAQ.OB - News), which filed the largest bankruptcy in U.S. airline history in December, said the loss amounted to $14.16 per share, compared with a loss of $510 million, or $9.22 per share, a year earlier.

United said it expects capacity to be lower than previously announced, and that it has seen some improvement in transatlantic bookings.

Operating revenue fell to $3.18 billion in the quarter from $3.29 billion a year earlier.

United on Wednesday secured bankruptcy court approval for labor cost cuts of $2.56 billion per year over the next six years to satisfy lenders who provided crucial cash for the air carrier''s restructuring.

 

[Daedalus]

UAL is gonna need the services of Baghdad Bob to try and explain this one away. I don''t see how anyone can find a silver lining in these numbers.

 

[novaqt]

With Rono Dutta and David Bonner now at USAirways courtesy of Retirement Systems Group, my crystal ball predicts the two companies will end up being merged as a means to consolidate domestically.

 

[WXGuesser]

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On 5/2/2003 9:55:52 AM novaqt wrote:

With Rono Dutta and David Bonner now at USAirways courtesy of Retirement Systems Group, my crystal ball predicts the two companies will end up being merged as a means to consolidate domestically.

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Won''t you come back to the five and dime, chipmunn?



TANSTAAFL

 

[atabuy]

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On 5/2/2003 9:55:52 AM novaqt wrote:

With Rono Dutta and David Bonner now at USAirways courtesy of Retirement Systems Group, my crystal ball predicts the two companies will end up being merged as a means to consolidate domestically.

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novaqt,
I guess the full airplanes and the wage cuts didn''t bring around the losses as much as you thought they would.
Maybe the guy you said knew nothing about the airline wasn''t as far off as you thought. I think you might owe winglet an apology. You were hard on him.

 

[kiowa]

It seems the "over capacity" is now about the size of Continental. Maybe they will liquidate soon and save the industry.

 

[jj]

Oh where oh where is Mr. Munn.This could be interesting.

 

[Busdrvr]

"novaqt,
I guess the full airplanes and the wage cuts didn''t bring around the losses as much as you thought they would.
Maybe the guy you said knew nothing about the airline wasn''t as far off as you thought. I think you might owe winglet an apology. You were hard on him."

Just curious, did you actually LOOK at the numbers? If you had, you''d noticed a few little tidbits that show a great deal of positive news going forward. First, notice that the labor costs were virtually unchanged YOY. How is that possible with the new multibillion dollar savings associated with the new contracts? They hadn''t been approved by the judge yet. Fuel was up by 44% YOY at UAL. Why? UALs BK voided the hedging contracts UAL had in place, leaving UAL at the whims of a $40 per barrel oil market. with oil on the south side of 30, and dropping, and the inability of everyone else to re-hedge any lower than UAL, that gap gets closed. Also consider the extensive amount of BK special charges. These won''t continue forever. UAL also ended the quarter with 1.6 Billion in CASH. This did NOT include the 365 million the IRS recently refunded us and does not include payments from the new "bailout" That puts the cash amount somewhere north of 2.2 billion. As far as fear that the DIP lenders can force liquidation ANYTIME in the near future, one must consider that the DIP lenders can ONLY call back the money they have loaned UAL. UAL drew down a WHOPPING 92 million in the first Q. They value of the DIP financing is in it''s guarentee of solvency for the company. UAL will likely not NEED to draw down another dime. Going Forward you can also expect booking at UAL, as compared to the rest of the industry, to go up. I still remember KC showing us just how "smart" the average consumer was when his "family" bought tickets on AMR (that paragon of financial stability, that we all said was about 3 months behind us, but what do we know, we''re just stupid airline employees) because they considered UAL a "gamble" (remind me NOT to take KC to vegas). As UAL''s future becomes more certain, even the most unsophisticated Kansans will see that buying a ticket on UAL is not a risky proposition.

 

[767jetz]

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On 5/3/2003 1056 PM Busdrvr wrote:

Just curious, did you actually LOOK at the numbers?

----------------​

I doubt they did. But I agree with you 100%. Q1 is historically the most difficult quarter to begin with. Add to that Iraq, fuel prices, BK charges, and the fact that the new contracts and savings were not in place, and you can easily explain the loss. Most people just take $1.3B x 4 and think we''re on track to lose $5.2B this year.

Going forward, with improved bookings, lower fuel costs, full implementation of the cost savings, etc. we will be cash flow neutral or maybe even positive by the end of the year. (IMO).

767jetz
(Soon to be A320jetz. Or what about Airbusjetz, or Frmr767jetz? )

 

[avek00]

The problem is that cash-flow neutral is not enough to satisfy the DIP lender terms. I have yet to see a plausible explanation as to how United will meet its October 2003 DIP target...

 

[atabuy]

----------------
On 5/3/2003 1056 PM Busdrvr wrote:

"novaqt,

I guess the full airplanes and the wage cuts didn''t bring around the losses as much as you thought they would.

Maybe the guy you said knew nothing about the airline wasn''t as far off as you thought. I think you might owe winglet an apology. You were hard on him."


Just curious, did you actually LOOK at the numbers? If you had, you''d noticed a few little tidbits that show a great deal of positive news going forward. First, notice that the labor costs were virtually unchanged YOY. How is that possible with the new multibillion dollar savings associated with the new contracts? They hadn''t been approved by the judge yet. Fuel was up by 44% YOY at UAL. Why? UALs BK voided the hedging contracts UAL had in place, leaving UAL at the whims of a $40 per barrel oil market. with oil on the south side of 30, and dropping, and the inability of everyone else to re-hedge any lower than UAL, that gap gets closed. Also consider the extensive amount of BK special charges. These won''t continue forever. UAL also ended the quarter with 1.6 Billion in CASH. This did NOT include the 365 million the IRS recently refunded us and does not include payments from the new "bailout" That puts the cash amount somewhere north of 2.2 billion. As far as fear that the DIP lenders can force liquidation ANYTIME in the near future, one must consider that the DIP lenders can ONLY call back the money they have loaned UAL. UAL drew down a WHOPPING 92 million in the first Q. They value of the DIP financing is in it''s guarentee of solvency for the company. UAL will likely not NEED to draw down another dime. Going Forward you can also expect booking at UAL, as compared to the rest of the industry, to go up. I still remember KC showing us just how "smart" the average consumer was when his "family" bought tickets on AMR (that paragon of financial stability, that we all said was about 3 months behind us, but what do we know, we''re just stupid airline employees) because they considered UAL a "gamble" (remind me NOT to take KC to vegas). As UAL''s future becomes more certain, even the most unsophisticated Kansans will see that buying a ticket on UAL is not a risky proposition.



----------------​

busdrv,
Who do you work for?
Temporary wage adjustments went into effect at the beginning of the year. I think they would have been factored in to the quarter.
The judge just approved the permanant ones in May.

 

[ual747mech]

Relax Folks.

The reason we posted more losses than American is because we are in bankruptcy. We are paying lawyers and accountants in the millions of dollars as part of the bankruptcy process. That''s why everybody is better off not being in bankruptcy if they can avoid it. Kudos to American. As soon as we will exit out of this bankruptcy we should be "OK".

 

[Bizman]

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On 5/3/2003 1056 PM Busdrvr wrote:

UAL also ended the quarter with 1.6 Billion in CASH. This did NOT include the 365 million the IRS recently refunded us and does not include payments from the new "bailout" That puts the cash amount somewhere north of 2.2 billion.



----------------​

Of which 1B is restricted. That means they only have 1.2b to work with, which isn't a lot when your losing the kind of money UAL is. Atabuy, is also correct. Pay cuts were in effect in the 1st quarter. Where are the rest of the cuts coming from to stop the bleeding. Surely you aren't counting on a $15 drop in oil prices to ofset over 1B in losses.

 

[gogogadget]

Another thing to look at is to not compare yourself to anyone else. American is a larger operation, still more employees and aircraft and with TWA, the increases were more in a upperscale , therefore haveing a more profound effect on labor expenses.

It is always funny when airlines compare themselves to eachother. An airline with 30k total employees makes a 1 billion dollar profit while an airline with 125k employees makes a billion dollar profit, who made more money? You must always look at the situation and the circumstances as a whole.

Good Luck and God Speed!

 

[FWAAA]

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On 5/5/2003 6:05:22 PM ual747mech wrote:

Relax Folks.

The reason we posted more losses than American is because we are in bankruptcy. We are paying lawyers and accountants in the millions of dollars as part of the bankruptcy process. That''s why everybody is better off not being in bankruptcy if they can avoid it. Kudos to American. As soon as we will exit out of this bankruptcy we should be "OK".

----------------​

Exactly. UAL''s operating loss was $813 million while AA''s operating loss was $869 million. With UAL''s much greater reliance on Asia, the result wasn''t really that terrible.

UAL''s $248 million expense for "reorganization items" (including, among other things, lawyers, consultants, accountants, bankers and others) was the real eye-popper - that''s a lot of dough.