CHICAGO, October 18, 2002—UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, reported its third-quarter financial results today.
The company incurred a third-quarter loss of $503 million, or a loss per basic share of $8.82 (see Note: EPS Calculation), before special items (including a tax valuation allowance) described in the notes to the financial tables. This performance compares to a third quarter 2001 loss of $542 million, or a loss per basic share of $10.05, excluding special items.
UAL`s quarterly loss, including the special items, is $889 million, or a loss per basic share of $15.57. This compares to a third quarter 2001 loss of $1.2 billion, or a loss per basic share of $21.43, including special items.
Glenn F. Tilton, chairman, president and chief executive officer, said, “There is no question that United continues to suffer from the financial challenges that plague our entire industry. Nevertheless, we continue to run a great operation and provide outstanding service for our customers in this very difficult environment.
“While no one underestimates the magnitude of the challenge, we are making good progress on our financial recovery program,” Tilton said. “We continue to work vigorously with all of our unions and other parties to achieve our number one goal: restoring the financial health of this airline without the necessity of an in-court process. The energies of management and labor are intensely focused on reaching our goal. At this point nobody should consider a Chapter 11 filing inevitable.”
United continues its single-minded pursuit of solutions to its current financial crisis on a number of important fronts. As it pursues these remedies, the company’s first priority continues to be accomplishing an out-of-court restructuring that puts the company on a firm financial footing.
“The company and the United Airlines Union Coalition are progressing toward a target of $5.8 billion in labor cost savings over a five-and-one-half year period,” said Jake Brace, executive vice president and chief financial officer. “Discussions with individual coalition members to finalize their component of the $5.8 billion are moving forward, but at varying paces. These discussions need to be brought to a quick resolution to achieve our common goal.”
In addition, United is engaged in discussions with lenders, suppliers and others to secure short- and long-term sources of capital. Moreover, a team of senior management representatives has developed a plan to achieve at least $1.4 billion in annual revenue and non-labor expense improvements.
Finally, United intends to file an updated business plan next week with the Air Transportation Stabilization Board that includes details on the company’s discussions with labor groups, lenders and suppliers and outlines plans for non-labor expense and revenue improvements that United believes makes a compelling case for federal loan guarantees as well as for the company’s ability to return to financial health and profitability. This process is progressing and United is moving quickly to finalize the structure and content of this plan.
Despite the company’s weak financial performance, United employees are running a superb operation. The company’s operating performance for the month of September set records that have never before been seen in United’s 76-year history. In the third quarter, based on internal analyses, United will achieve the No. 2 ranking among the 10 major airlines in on-time performance, clearly setting United apart from its major competitors. Additionally, in July United ranked first among the reporting airlines, setting another historic milestone for the company.
For September, United’s on-time arrival performance averaged 89.2 percent, which easily beat the company’s previous record of 86.3 percent eight years ago in October 1994. Three of the records United’s employees broke in September were previously set in May 2002:
United`s September departure completion rate of 99.7 percent compared to May`s 99.6 percent; United`s on-time departure :00 (flights leaving exactly on time) performance of 79.6 percent was almost four percentage points higher than May`s record of 75.7 percent;
And the company`s key early morning departures at 87.9 percent for September beat May`s record of 85.3 percent.
“These certainly are unprecedented times for United, and employees are responding by doing the best jobs that they know how,” said Pete McDonald, senior vice president-Airport Operations. “The hard work, dedication and teamwork that allowed the company to achieve this milestone is proof to our customers that despite the financial crisis this airline faces, United stands ready to provide them with the service they deserve for years to come.”
For the quarter, United improved its operating performance compared to the same period last year. United’s on-time departure average for the quarter this year was 71.7 percent compared to an average of 51.0 percent last year. The company’s on-time arrival performance averaged 84.6 percent for the quarter compared to an average of just 68.1 percent last year. United’s departure completion rate, or the number of scheduled flights that actually operated, was 99.3 percent this year versus a completion rate of 90.0 percent in 2001.
United`s year-over-year improvement in reliability outperforms the rest of the industry. For January through August United`s on-time arrival performance increased by 13.0 percent. On average, the rest of the industry`s on-time arrival performance improved by only 5.0 percent. “United’s employees are doing a terrific job, and our customers have noticed,” Tilton said. “In July we outperformed all of our competitors in on-time performance and we continue to improve our year-over-year on-time rankings. Our numbers continue to be better than many of our competitors. Despite our well-publicized financial challenges, the traveling public appears to remain confident flying United, as we are not seeing an impact on our advance bookings.”
Full results: www.ual.com