Financial Times Extract
UAL to rebuild capacity despite Q4 $308m loss
By Mark Odell
Published: February 1 2002 13:51 | Last Updated: February 1 2002 15:08
UAL, the parent of United Airlines, reported fourth-quarter losses which were less than expected and announced plans to start adding some capacity amid signs of a tentative recovery in demand.
Net losses for the three months to the end of December increased to $308m, or $5.68 per share, compared with a $71m loss for the same period last year.
The result was cushioned by one-off gains of $332m, including a $261m second tranche of state aid - part of the the $5bn in cash made available under the $15bn federal emergency aid package for the industry.
Excluding the exceptional credits, the world's second-largest airline suffered a loss of $640m, or $11.74 per share, well below the consensus estimate of a $14.96 per share loss on Wall Street.
The lower-than-expected quarterly loss did not prevent UAL from slumping to the biggest full-year loss of the big seven US airlines, as it reported a deficit of $2.1bn compared to a profit of $50m in 2000.
"While our financial results this quarter reflect a decline in both business and leisure travel, during the fourth quarter we saw signs that air travel is slowly beginning to recover," said John Creighton, UAL's chief executive.
The carrier plans to add back 127 daily flights in the summer schedule at the start of April, mirroring American Airlines' decision earlier this week.
Despite the cautious optimism, UAL said it expected yields, a measure of average ticket prices, to remain 15-17 per cent below last year's levels in the current quarter and warned of a "significant" first quarter loss.
Fourth-quarter revenues were 39 per cent below 2000 levels at $2.95bn, as traffic slumped by a quarter and yields fell 20 per cent. The carrier cut capacity by 20 per cent in the quarter grounding aircraft, leading to thousands of job losses.
The cash burn in the fourth quarter averaged $10m per day but the carrier still ended the year with $2.6bn in cash. It has cut its planned capital spending programme in half for the current year to $1.2bn, largely by defering aircraft deliveries.