Including the $300 million in government aid and $365 million in a federal tax refund, United Airlines posted a wider second quarter loss of $623 million. Even though the airline is not paying all of its bills in bankruptcy, the loss was far larger than that of its biggest rivals American, Delta, Northwest, Continental Airlines, and US Airways.
According to Reuters, excluding the government aid and charges of $447 million in special items, UAL said its loss was $476 million, or $4.79 per share. At American Airlines parent AMR, the operating loss was narrower, at $357 million, and the net loss was far less at $75 million. ``The losses (at UAL) were disappointing considering the high expectations about an impending turnaround,'''' said Joseph Schwieterman, airline expert at DePaul University. ``The weakness in average fares was particularly disappointing. Yield was down 7 percent year-over-year.''''
An interesting independent evaluation of Unitedâ€™s results were provided by S&P. For more information on this story click onto:
According to S&P, United met the June earnings before interest, taxes, depreciation, amortization, and rent (EBITDAR) covenant in its debtor-in-possession (DIP) credit facilities and said it expects to meet the July covenant as well, but continues to face the risk of breaching the EBITDAR covenant later in 2003 as the requirements become more stringent.
UAL chief executive officer Glenn Tilton told employees in a recorded phone message that the carrier has some very tough decisions ahead. Could some of these be:
Elimination of the Dulles hub?
A fragmentation or asset sale? Could this be a front burner issue especially since US Airways chairman of the board David Bronner, who controls RSA that owns United aircraft EETCs, could seek to protect his investment.
Successful conclusion of numerous difficult creditor negotiations?
Meeting bankruptcy DIP requirements for EBITDAR?
Making additional sacrifices to obtain a federal loan guarantee?
Obtaining exit financing and /or an equity plan sponsor?
Meeting substantial upcoming pension funding requirements that could include defined benefit plan terminations?