UAL Reports Significant Restructuring

UAL Corporation, the holding company whose
primary subsidiary is United Airlines, today reported its fourth-quarter
and full year financial results for 2003, demonstrating significant
progress in the restructuring of the company. Because of the work the
company completed in the last year, UAL remains on track to exit from
bankruptcy protection in the first half of 2004 poised to compete for the
long term.
UAL`s fourth-quarter operating loss was $135 million, a strong improvement
of $859 million over fourth-quarter results last year, which reflects the
company`s continued success in the pursuit of lower costs and improved
revenue. UAL reported a net loss of $476 million, or a loss per basic
share of $4.33, which includes $225 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 fourth quarter totaled $251 million, or a loss per
basic share of $2.30.
“Through relentless hard work, creative problem solving and dedication to
our customers, we are building a dramatically different company - a much
more competitive, cost-effective and customer-focused airline,” said Glenn
Tilton, chairman, president and chief executive officer. “We would not
have been able to achieve so much this year without the total focus and
commitment of all United employees, pulling together to meet the
challenges. Our work is not done yet. We have made significant progress on
restructuring this company, and we will continue to make the tough
decisions to successfully exit from Chapter 11 in the first half of this
year.”
Tilton said that in the fourth quarter United:—Increased passenger unit
revenue 10% compared to last year, an improvement that outperformed the
industry;—Reduced unit costs by 17%. Excluding fuel and special
charges, unit costs dipped by 20%;—Improved earnings from operations by
$859 million over the same quarter a year ago; and—Announced and
started selling tickets on Ted, United`s low-fare operation, which begins
flying to leisure destinations on Feb.12.

The company also maintained a strong cash balance during a seasonally weak
quarter. UAL ended the quarter with a cash balance of $2.4 billion,
including $679 million in restricted cash.

UAL`s loss for the full year 2003, including special and reorganization
items, totals $2.8 billion, or a loss of $27.36 per basic share. Excluding
special and reorganization items of $1.1 billion, UAL`s loss for the full
year totals $1.7 billion, or a loss of $16.80 per basic share, a $1.5
billion improvement over 2002.

UAL`s fourth-quarter 2003 operating revenues were $3.6 billion, up 4%
compared to fourth quarter 2002. Load factor increased 5 points to 76.9%
as traffic declined 1% on a 7% decrease in capacity. Passenger unit
revenue was 10% higher on a 3% yield increase. The unit revenue
improvement was among the best in the industry. The improvement was driven
by United`s aggressive marketing and sales activities, restructured
business fares, enhanced inventory management and route and capacity
adjustments.
Total operating expenses for the quarter were $3.8 billion, down 16% from
the same quarter last year. United`s mainline unit cost decreased 17%.
Excluding fuel and special charges, mainline unit cost decreased 20%
year-over-year, among the best cost improvements in the industry.

Salaries and related costs decreased $539 million or 30% for the quarter.
This amount reflects the reduction in wages, changes in benefits and work
rules, and productivity improvement associated with United`s new six-year
collective bargaining agreements (CBAs). While capacity was down for the
quarter, productivity (available seat miles divided by manpower) was up
16% for the quarter year-over-year.

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Aircraft rent decreased $95 million or 43% compared to fourth quarter
2002. United negotiated reduced lease amounts on some of its aircraft and
is still in negotiations with respect to a large number of aircraft in its
fleet.
Average fuel price for the quarter was 95.5 cents per gallon, up more than
10% year-over-year.

Aircraft maintenance, which includes primarily maintenance outsourcing and
maintenance materials, increased $41 million or 31% year-over-year.
However, overall maintenance costs are down significantly from fourth
quarter last year due to the company`s ability to outsource maintenance.

During the fourth quarter of 2003, UAL sold its investment in Hotwire, a
leading discount travel web site, for cash proceeds of approximately $85
million and recognized a gain of $81 million. In connection with the
initial public offering of Orbitz, Inc., UAL`s subsidiary, United
Airlines, recognized a gain of $77 million as a result of the issuance of
additional shares by Orbitz and the sale of a portion of its investment in
Orbitz.
The company had an effective tax rate of zero for the fourth quarter,
which makes UAL`s pre-tax loss the same as its net loss. The company
currently anticipates that the Bankruptcy Court may rule on issues
relating to its municipal bonds within the next month. Depending on the
outcome of this ruling, the company`s fourth quarter and full year
financial results could change. In this event, the changes would be
reflected in the company`s financial statements filed with the Securities
and Exchange Commission in the Form 10-K on or before March 15, 2004.

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