UAL Corp - the parent of United Airlines - A Member of Star Alliance - has announced a net loss for Q1 (I think) of US$459 million.

Q1 operating loss was US$211 million compared to US$813 million a year ago. Revenue rose 17%, expenses fell 1.4%.

March saw a small operating profit.

Source: Reuters / Yahoo

In addition, UA is treating UAX differently now. Per the report:

(3) During the second half of 2003, United changed its classification of
United Express ("UAX") revenues and expenses for United Express
carriers Air Wisconsin Airlines Corporation, Mesa Air Group, SkyWest
Airlines and Trans States Airlines in conjunction with new or
substantially revised agreements with those carriers. Previously,
revenues and expenses were netted and recorded in passenger revenue.
In accordance with Emerging Issues Task Force No. 01-08, "Determining
Whether an Arrangement Contains a Lease", the Company concluded that
the revised agreements are leases and required to be recorded gross
on the income statement. Therefore, amounts for these United Express
carriers are recorded as "regional affiliates revenue" and "regional
affiliates expense." Prior period amounts have not been
reclassified.

United was not able to reach a comparable market-based arrangement
with United Express carrier Atlantic Coast Airlines ("ACA"). As a
result, the revenues and expenses related to ACA continue to be
included net in passenger revenues. On April 2, 2004, United and ACA
agreed to end the UAX relationship and entered into a formal
transition agreement providing for an orderly transition of UAX
flying and ground handling. United is planning to replace the ACA
flying with a combination of six regional airlines (and some United
mainline service) including some new UAX carriers that we expect to
account for as leases in conjunction with EITF-01-08.

-------------------------
If you look at UAX revenues versus costs, you'll see UAX lost quite a bit of money!

Operating revenues:
Regional Affiliates* 293

Operating costs:
Regional affiliates* 374

They are competing with US to see who can burn the most money, the quickest.

I don't think there is any saving either of these carriers...which is too bad.

And the Titanic Continues to sink as the band plays on.....

"They are competing with US to see who can burn the most money, the quickest."

I think UA is doing a good job of getting back on track. UA and US are not the only carriers that are losing money.

Here is a scorecard for the other money losing majors:

NW - net loss $230MM
AS - net loss $42.7MM
AA - net loss $166MM
DL - net loss $383MM
CO - net loss $124MM

Relative to the size of operation, looks like some carriers are burning cash at a faster rate than UA.

Indy Air is looking more attractive.....

Reading over the press release from the cited article, there's a lot of reasons to be optimistic about UAL. Tilton admitted much work remains to be done, but it's very clear to me that United has made significant progress over the past year in turning things around. Q1 is always a tough quarter for airlines, and the good news for UAL and others is that the summer season is here, and there's a huge opportunity to capitalize on that and further improve the company's position.

Who here noticed that UAL began making the first of its REPAYMENTS to Bank one for its DIP loan? That's bound to put at least a few smiles on creditor's faces. An operating profit in July, an increase (albeit small) in the cash balance, productivity and revenue increases compared to 2003...and all that in the face of rising oil prices, which hurts everyone, even the darling LCC's that everyone loves so much. This is the biggest hurdle I think...despite the best intentions of management and labor, if fuel costs continue to skyrocket, any gains could be quickly wiped out.

The important thing is to keep things in perspective...compare Q1 2004 with last year, and then look at month to month performance. Realize there's still a loss, but look at the positives and the progress that's been made thus far.

Looking at the scoreboard, for whatever that means, I'd be worried about DL the most, because they are NOT in Ch. 11 and there's still no deal with pilots. Remember also that the UA figure of $459 includes reorganization expenses, which go away once they reemerge. DL can't make that excuse right now. Plus, they don't have the route structure that UA does, either. And what about NW? While not a Ch. 11 threat, they're also trying to secure cost cuts from pilots.

"DL can't make that excuse right now. Plus, they don't have the route structure that UA does, either."

DL may not operate to as many cities across the world, but DL and UA are roughly the same size. Their fleet sizes are close, DL operates 500 more daily flights than UA, and carries more passengers. DL also serves more cities than UA. All of the big six need to get it together somehow. In the business world a loss is a loss.

Jeremy

The industry standard measure of size is the Revenue Passenger Mile.

Biggest Airlines, Jan-March 2004

American 48,634,178
United 41,888,939
Delta 39,019,425
Northwest 26,878,443

Source: ATW

United is 7% larger than Delta, while American is 14% larger than United.

I agree, UA/DL are roughly the same size.

Wait a minute... DL lost 383 million NW lost 230 million! Hold the phone when did this happen? I'm aghast, UA is supposed to have been gone by now. Why are we still here? It's just not fair to DL and NW, if only UA and US would go belly up then they could make money without having to make changes like UA is doing.

Excuse me, but while I am very disappointed that we continue to lose money, UA still maintains $2.6 billion in cash. UA continues to make strides forward, outpacing all the other money losers in unit cost reduction and operations. If the damn fuel situation would only improve all airlines might be able to make some real money.

But none of this is what Airliner.net folks want to hear.

[Edited 2004-04-29 22:51:53]

It's not that people don't want to hear that UA has money in the bank, and that they are making strides to TRY and recover...but the fact is that 9/11 only SPED UP UA's current situation, it didn't start it. I'd be sad to see UA go under, but when there's poor management....well, you get the picture.

Will any airline ever gain some money ever again?

Hey I'm not arguing that poor management didn't got UA into this fix in 2001. But no one can say that good management should not be allowed to resusitate the airline. UA has had good, then better management after Goodwin.

Alot of you people want instant gratification, just get rid of UA. Well it isn;t going to happen. Get used to seeing the new Blue and White birds in the air for a long time to come.

Ouch.. another quarter of staggering losses for UAL. 5.1 million dollars per day of losses. While I agree that this is a slow quarter, those losses are still a lot higher than they should be at this point. Paycuts have kicked in now, as have many of the other cuts, yet they are still far exceeding the losses of every other carrier.

I do not compare UAL to Continental, but I do compare them to AA and considering that AA is larger than UAL, and lost about a third of the amount that UAL lost, I'd say this was another bad report.

While summer will certainly bring a brighter time, Summer will not make the sort of money that overcomes losses like this, and then winter will come again to hammer at the door.

Keep your heads up folks
J

Okay... So UA loses more money than basically anyone else, and people still want to give them money? This can only happen when the government is involved.

The government didn't want to save National, Vanguard, or Midway. Why should they give money to HP, US, and UA?

Now, HP has made the changes it needs to make to put the airline back on the right track. I'm not so convinced that US and UA have done the same. Someone prove it to me.

What I don't understand is why UA has banks of departures and arrivals. Why? Sure, it may be a little bit more convenient for a connecting passenger, but it's VERY costly to the airline. So many gates have to be used, and also there have to be more workers handling the ground operations. Why not take a JetBlue approach and not have absolutely huge banks during certain times of the day?

Just my thoughts, but these losses aren't as bad as they've been in the past. It's nice to see that they're trying hard to restore profitability.

JetBluefan1

As my transport industry class professor said "The airlines in the U.S. are just hemorrhaging money"

Grim outlook for the industry here in the U.S.

I say, we need to try something new here. Lets get some execs in from SQ and LH and see what they can do given that their airlines are profitable (under much different circumstances I know).

Or else, I think the airline industry is going to be re-regulated.  

Giving UA our tax dollars, in the tune of $1.6 billion, is a waste of money. UA seems to be waiting for this money as the answer to all their problems. It will simply be throwing tax dollars down the drain.

If ever there was a good way to get UA to REALLY impliment serious change-in fleet, in costs, in culture, Uncle Sam saying "NO" to them might just spur it, and that would be all to the good. But giving them this free rid only encourages them not to face up to their long-term difficulties.

Why not take a JetBlue approach and not have absolutely huge banks during certain times of the day?
****

Jetblue are just a non entity when compared to the size of UAL never mind the rest of the major carriers. You could take all of Jetblues departures that they have across their network, and have them all depart at the same time from one airport, and it wouldn't touch what AA and UAL are dealing with every day.

What does Jetblue have ? 45 planes ? sheesh
J

UAPHLCS - you're one of the few people around here that understands that the OLD, inept management is gone. Tilton has assembled a pretty good team of managers and if you don't work for the company like we do, you just don't get to see the changes that are occurring.

Has it become the 'workers paradise' of the airline industry? far from it, but for the employees that 'get' it, UA is well on the road to recovery.

folks have to really read the financial statement....if it wasn't for the dam lawyers and the reorganization costs, our numbers are on a par, or better than most of the other legacy carriers....

ALPHA1 - UA is NOT getting 1.6 billion from the taxpayers....we're asking for a loan guarantee! - BIG DIFFERANCE!....Hell, if you're worried about wasting the taxpayers money, take a look at the foreign aid budget (but that's a whole different website).

UAPHLCS - I've gotten used to the crowd on this website that wants UA to fail and believes that our failure would be the cure-all for the industry and I try not to let it bother me - they don't see the things that are changing around UA.

I agree with UAPHLCS, long live UA! UA wont be going anywhere, there is too much at stake. Therefore I will continue to fly my hometown airline UA!

http://biz.yahoo.com/rf/040429/airlines_ual_s_p_1.html

I find it staggerring that even whilst in Bankruptcy protection they are still making the larger loss.

Are they still not having to pay all their bills? I wonder what the loss would have been if they were?

Anyways cash flow was positive which is a good sign.

Well, the bad management is still at United or I like to call them "The crooked U." I am a mechanic there and all I see is the fact that we are losing the work we used to do. United has a bad way of trying to save money. You don't chop up a company to make it profitable. That is Stephen Wolf's legacy living on here.

ALPHA1 - UA is NOT getting 1.6 billion from the taxpayers....we're asking for a loan guarantee! - BIG DIFFERANCE!...
****

What most people including myself feel annoyed about is this. On one hand we have a whole host of UAL employees saying how great everything is, how you guys are really on the verge of making money, and how we are repeatedly told that you (UAL) still have 2.6 billion cash in the bank. IF things are so good, and if you are on the verge of making money, and if you have all these billions in savings, then why the hell do you need to get a further 1.6 billion ?. I mean, if you are not losing money, and have 2.6 billion, (which by most of your accounts) is actually growing each month, then how would you ever run out of money, or need access to more capital ???

The fact is, UAL is trying to improve, and god knows, I am one of Tiltons biggest fans, I have been supportive of him from day one, but the facts are that most believe that the changes that are required are beyond the scope of what is possible. In order for UAL to make money, and I mean real money in a real environment when they are paying their bills etc, they need to shrink massively, they need to reduce costs a LOT more than the 1.4 % they dropped it last month, and more than likely, more paycuts will be needed.

UAL seems to be avoiding making the drastic cuts that are needed, and seem to be waiting for a magic bullet to come from somewhere. Either from a loan, or from an industry recovery, and most likely, neither are coming. UAL could get out of this mess, but they need to get their fingers out, not worry about pride, and just get it done.

J

Here's the article in today's edition of USA Today's money section.

*********************************************************
Fuel costs push UAL loss to $459M
By Marilyn Adams, USA TODAY
Battered by soaring fuel costs, United Airlines' parent UAL lost $459 million in the January-March quarter amid its ongoing bankruptcy reorganization.
UAL's loss, announced Thursday, is the largest in a series of quarterly losses reported by major U.S. airlines in the past two weeks.

Yet, it was down dramatically from UAL's $1.3 billion net loss a year earlier. In early 2003, the Iraq war and terrorism scared away many fliers, especially on United's international routes.

On a per-share basis, United reported a first-quarter loss of $4.17, vs. $14.16 a year ago.

The No. 2 airline said recently that fuel will cost it $450 million more this year than expected, but Chief Financial Officer Jake Brace said Thursday that the overrun will be even worse if prices don't come down. During the first quarter, fuel cost at least $80 million more than planned, he said.

Because it's in bankruptcy, United can't hedge fuel costs, making it vulnerable to price increases. Apart from fuel, Brace said, results were "right on plan."

Benchmark Co. analyst Helane Becker said the results weren't unexpected. But she questioned whether and when UAL's cost cutting will overcome the effects of costly fuel and ticket prices depressed by fierce competition. Since seeking bankruptcy protection in December 2002, UAL has cut $2.5 billion a year in labor costs and $900 million a year in aircraft costs.

"If they still don't make money in the third quarter, it will definitely be a negative," she said. The July-September quarter is typically the industry's strongest.

About $143 million of the net loss in the new report stemmed from special items and bankruptcy-related costs. On an operating basis, UAL lost $211 million in the quarter and made a small profit in March, in part because of spring break travel. Revenue for the quarter rose 17%, and unit costs fell 11%. The airline had positive cash flow, ending with $2.6 billion cash.

UAL earlier this year also launched Ted, its low-fare carrier flying routes popular with leisure travelers. Ted's planes were 89% full in March, the company said. Ted now flies from Denver, Washington Dulles, San Francisco and Los Angeles, and soon will start service from Chicago, United's hometown.

UAL isn't required to report Ted's results, and Brace declined to say whether Ted made money.

By now, UAL had hoped to be preparing its exit from the airline industry's biggest-ever bankruptcy case. But UAL probably will have to wait several more weeks for a decision on its application for a $1.6 billion federal loan guarantee that it says is essential to getting a bankruptcy exit loan.

Officials from other airlines say the federal loan board reviewing UAL's application has been asking them for revenue projections to compare with UAL's. Although the airline had planned to exit bankruptcy by June 30, it's expected now to take much longer.

"We continue to work with them," Brace said of the loan board. "We want to get out of bankruptcy as soon as we possibly can."

XUALOWNER,
Your name speaks for itself, you are a disgruntled employee. Ual doesn't need all the mechanics laying around doing nothing, your department got the ax and so did many others, you need to either grow up, or take some anger management classes and get over your beef.

arty,
The reason most UAL employees feel the company is doing better is because we are. Speaking for myself on this, UAL may be in BK but when do you post a profit while in BK? You don't think that most of these losses are paper losses? An operating profit of 4 million a day? UAL Is making changes, but to try and convince the small minds of this forum would be like teaching a special ed class. While I am not saying I have all the answers, or that I even understand all the BS that goes along with our BK and returning to a healthy airline. I would think that cooking the books to look better or worse does happen, but we continue to get better.

I for one am a positive employee, if I acted like XUALOWNER, then I too would rain with a dark cloud. If I could have had all the responses of some of these rocket men about our demise I would post them so they too could see the nonsense they print, we are still here.


UAL 777 CONTRAIL

ALPHA1 - UA is NOT getting 1.6 billion from the taxpayers....we're asking for a loan guarantee! - BIG DIFFERANCE!....

Thus basically UAL gets a loan from the US government as they can't get the money in the market due to the fact the market views UAL as too risky to loan money to without any form of guarantee/collateral.

I mean, if you are not losing money, and have 2.6 billion, (which by most of your accounts) is actually growing each month, then how would you ever run out of money, or need access to more capital ???

Maybe because the 1.6 billion is already included in the 2.6 billion????? Other possiblity is that of the 2.6 billion most is already "spend" and it's just the timing of the cash flows which created the 2.6 billion.

You don't think that most of these losses are paper losses? An operating profit of 4 million a day?
****

The official report quotes that UAL had an actual operating loss of 211 million for the quarter. It stated that of the 459 million lost, only 143 million was "paper" and "Chapter 11" related costs. As far as you guys doing better, you don't need to explain it to me, I know it, I see it, I hear it, I totally believe that you guys have made some great strides as far as service and quality etc, but I feel little has been done in regards to getting profitable. Unfortunately and sadly, the customer of today doesn't seem to care if they are treated well, or like we treat Indianguy, they only care about price, and with that, all that counts these days is the bottom line, which you correctly pointed out... is crap for all of us.

J

J - I agree...does anyone think you can attribute this to the overflow of carriers in the US these days? There are just so stinkin' many of them.

-jeff