CHICAGO, April 19, 2002—UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, reported its first-quarter financial results today.
The company incurred a first-quarter loss of $487 million, or a loss per basic share of $8.81 (see Note: EPS Calculation), both before special items described in the notes to the financial statements. This performance compares to a first quarter 2001 net loss of $305 million, or a loss per basic share of $5.82, excluding the cumulative effect of an accounting change.
UAL`s first quarter loss per share of $8.81 before special items is significantly better than the First Call consensus estimate of $10.24 as of April 18, 2002.
The special items recorded in the first quarter total $23 million, net of tax. They include an after tax charge of $52 million in conjunction with the closing of Avolar, offset by an after tax gain of $29 million related to the sale of Cendant shares. UAL`s quarterly loss, including special items, is $510 million, or a loss per basic share of $9.22. This compares to a first quarter 2001 loss of $313 million, or a loss per basic share of $5.97, including the cumulative effect of an accounting change.
John W. Creighton, chief executive officer, said, “We certainly are seeing signs that our industry`s situation is beginning to improve, but there still is a long way to go. When I came to United last October, we focused on getting the airline back on the road to financial stability. It was my hope that we could put in place a four-plank recovery plan as soon as possible, and we have definitely made progress. We`ve reduced our operating and capital budgets in every way possible, boosted our cash position and we are focused on generating revenue with all means available to us.
“However, complications with negotiating open labor contracts have impeded our progress on reducing salary and other operating costs,” he adds. “Even though this has slowed us down, we will continue working to get our costs in line with our revenues.”
United and the International Association of Machinists (IAM) District 141M on Feb. 18 reached tentative agreement on a contract for the airline`s mechanics, utility workers and related employees. After reviewing the proposal, IAM 141M`s membership voted to accept the agreement, ending more than two years of contract negotiations and averting the possibility of a strike.
“The contract settlement between United and the IAM 141M provides a foundation on which to build our financial recovery efforts,” Creighton says. “Our next goals are to address the outstanding contracts with IAM District 141 and then to work collectively and creatively with our union leadership and all employee groups to continue with United`s recovery plan.”
UAL’s operating revenues were $3.3 billion, down 26 percent from the same period last year. This is a significant improvement over the fourth quarter 2001 year-over-year operating revenue decrease of 39 percent. Excluding special items, operating expenses for the first quarter were down 19 percent and unit cost was flat. Load factor for the quarter was 72.2 percent, on a 19 percent decrease in capacity, a 3.9 point increase over the first quarter 2001.
UAL`s cash burn was reduced from $10 million a day in the fourth quarter to less than $5 million a day in the first quarter. UAL ended the quarter with a cash balance of $2.9 billion - an increase of $300 million from last quarter.
Despite the challenges the airline is facing, United continues to improve its operating performance. The company each month in the first quarter set record levels for its own on-time departure and arrival performance. Additionally, mishandled baggage has improved by 32 percent year-over-year, and the airline`s completion rate for the quarter was 99.1 percent—one of the highest numbers the company has seen in years.
“I want to thank our employees for running a great airline,” Creighton said. “Their efforts are translating into great performance and outstanding service for our customers.”