Published January 27, 2006
CHICAGO – Just days away from leaving bankruptcy, United Airlines reported a fourth-quarter operating loss of $182 million Friday, marking improvement but underscoring its inability to make a profit yet despite a three-year restructuring.
The nation's No. 2 airline and its parent UAL Corp. plan to emerge from Chapter 11 on Wednesday.
The net loss was a record $16.9 billion for the fourth quarter and $21.2 billion for the year, virtually all non-cash reorganization expenses. Most of those on-paper losses will be reversed within days, reflecting unsecured claims that will be settled for a fraction of the charges.
The company is expected to disclose a multibillion-dollar gain when it leaves bankruptcy next week, formally accounting for overturning many of the losses.
The October-through-December period was the company's 22nd consecutive quarter in the red.
Fuel costs that were 44 percent higher than in the fourth quarter of 2004 contributed significantly to the operating loss, which nonetheless was a $388 million improvement over the same quarter a year earlier. The company said revenue gains and non-fuel cost reductions, including a 27 percent drop in salary-related costs due to United's labor shake-up, helped offset a $397 million increase in spending on fuel.
The net loss amounted to $145.47 per share, compared with a net loss of $741 million, or $6.39 per share, a year earlier. Excluding reorganization and one-time items, the company said the net loss was $297 million.
Revenue was $4.4 billion, up 10 percent from $4 billion.
Including the claims that will be settled next week, lessening the total, UAL has reported $26.9 billion in net losses since filing for federal bankruptcy protection in Dec. 9, 2002. It also lost more than $5 billion in the 2 1/2 years before bankruptcy, since last posting a net gain in the second quarter of 2000.
Despite the continuing losses, CEO Glenn Tilton said the company has established a solid financial platform.
"Although operating earnings for both the fourth quarter and the full year 2005 have improved significantly despite an increase in system fuel price of over 40 percent, we know we can do better," he said. "We will continue to contain costs, apply sound revenue management and deliver consistent service to our customers."
For the full year, the net loss amounted to $182.29 per share, compared with a net loss of $1.72 billion, or $15.25 per share, in 2004. Revenue rose 6 percent to $17.4 billion from $16.4 billion.
The company said the 2005 net loss without reorganization and special items was $557 million, or less than half that of the previous year. The operating loss was $219 million.
United's current shares will be virtually wiped out when it leaves bankruptcy. The company's new stock will begin trading next week on the Nasdaq Stock Market under the symbol UAUA.