UAL Corporation , the holding company whose primary subsidiary is United
Airlines, today reported its first-quarter 2004 financial results, which
continue to demonstrate significant progress in the company’s
restructuring. UAL’s first-quarter operating loss was $211 million, a strong improvement
of $602 million over first-quarter results last year. This reflects the
company’s continuing efforts to restructure its business by lowering
costs, increasing productivity and improving revenue performance. UAL
reported a net loss of $459 million, or a loss per basic share of $4.17,
which includes $143 million in special and 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 the special and reorganization items, UAL’s net loss for the
first quarter totaled $316 million, or a loss per basic share of $2.89.

“We are doing exactly what we said we would do to be able to succeed in
the new revenue environment—maintaining a relentless focus on reducing
costs and improving efficiency,” said Glenn Tilton, chairman, president
and chief executive officer. “But, there is still a lot of work ahead of
us. Like the rest of the industry, we are impacted by fuel prices. Unlike
our peers, though, we have landmark, consensual six-year labor agreements
that will differentiate us competitively in the years ahead.”

Tilton cited several of United’s achievements in the first quarter:—
Cleared major issues on path to exit, including pension legislation that
defers a portion of our 2004 and 2005 pension funding obligations to
future years; a court ruling that our municipal bonds in Los Angeles, New
York and San Francisco were pre-petition debt; and a recently approved
transition agreement that ensures seamless service for United Express
customers formerly served by Atlantic Coast Airlines;—Increased
passenger unit revenue 14% compared to last year, an improvement that
outperformed the industry;—Reduced mainline unit costs by 11%.
Excluding fuel, unit costs dropped by 14%, an improvement that also
outperformed the industry;—Improved earnings from operations by $602
million over the same quarter a year ago;—Introduced Ted’s lower-fare
service to leisure travel destinations across the country with a current
daily total of about 120 flights to a number of leisure destinations from
United’s hubs in Denver, Washington Dulles, San Francisco and Los Angeles.
For the month of March, Ted had 89 percent load factor and on-time
arrivals :14 were at 88 percent. Booking growth on Ted flights continues
to match or exceed capacity additions;—Announced new international
routes - United will begin Beijing-San Francisco and Chicago-Osaka service
in June. United also announced this week that it will be the first U.S.
commercial carrier to provide service to Vietnam, implementing daily San
Francisco-Ho Chi Minh City service via Hong Kong as soon as the necessary
regulatory procedures have been completed by the relevant Vietnamese and
U.S. government agencies; and—Introduced dynamic new aircraft livery
and launched the “It’s Time to Fly” print and TV advertising and brand
campaign to further re-engage customers.

Jake Brace, United’s executive vice president and chief financial officer,
said, “In the first quarter, United’s financial performance was right on
plan with the exception of fuel costs. Our revenue performance met our
expectations in the seasonally weak first quarter, but, like the rest of
the industry, United has been adversely impacted by historically high fuel
prices. Looking ahead, we are encouraged by strong bookings as we move
into the second and third quarters - our high demand season.”

Financial Results Continue Improvement

The company recorded positive operating cash flow of over $4 million per
day in the quarter. UAL ended the quarter with a strong cash balance of
$2.6 billion, including $683 million in restricted cash. UAL’s
first-quarter 2004 operating revenues were $3.7 billion, up 17% compared
to first quarter 2003. Load factor increased 3.6 points to 75.3% as
traffic increased 5.8% on a 0.8% increase in capacity. In March, load
factor reached a record 80.1%, up 6.4 points over March 2003. Passenger
unit revenue was 14% higher on a 9% yield increase. Although
year-over-year unit revenue improvement was aided by last year’s weakness,
our route and capacity adjustments, aggressive marketing and sales
activities helped United outperform the industry by a wide margin.

Total operating expenses for the quarter were $3.9 billion, down 1% from
the year-ago quarter.

Salaries and related costs decreased $287 million or 19% for the quarter.
Productivity (available seat miles divided by manpower) was up 13% for the
quarter year-over-year.

Aircraft rent decreased $64 million or 32% compared to first quarter 2003.
UAL is on track to achieve average annual cash savings of $900 million
from the Section 1110 process.

Average fuel price for the quarter was 107.4 cents per gallon, up 4% year-
over-year.

Aircraft maintenance, which includes primarily maintenance outsourcing and
maintenance materials, increased $67 million or 57% year-over-year.

The company had an effective tax rate of zero for the first quarter, which
makes UAL’s pre-tax loss the same as its net loss.

Operational Performance Among the Best in UAL History

The company continued to deliver outstanding operational performance for
the first quarter 2004. Sixty-nine percent of United flights departed
exactly on time during the quarter, nine percentage points 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.
Customer definite intent to repurchase and passenger ratings of
reservations, check-in and comfort were at all-time highs for the quarter.

Glenn Tilton said, “As we restructure our finances we are also changing
the way we do business, shifting our company culture to concentrate on
performance and accountability. United employees this week received their
first payments as part of the company’s Success Sharing program, which
rewards employees for meeting the company’s business objectives, including
on-time performance and customer intent to repurchase. I want to
congratulate all our employees on delivering a record for the quarter that
we can be proud of and that demonstrates the kind of hard work and shared
focus on our customers we need to compete effectively.”
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