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artsyman
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Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:13 am

For those of you that think the US airline industry, and more importantly that UAL have recovered, here is another reminder of the reality on the ground (or in the air). This is $ 8,000,000 per day loss and close to the $10,000,000 per day that they were losing last year, and this is even after the drastic cutbacks that the staff endured. While I am implying nothing with this, it shows how far everyone has to come.

United Airlines loses $252 million in January; shifts call centers to Canada


United Airlines (UA) Thursday reported an operating loss of $191 million in January. Its net loss last month, including $26 million in reorganization expenses, was $252 million.

Separately, UA signed a contract with Electronic Data Systems (EDS) to open a customer call center in Nova Scotia, Canada, next month, an arrangement the airline worked out through its bankruptcy proceedings.
 
Cory6188
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:15 am

Are any of the Big Six even close to profitable? I know CO and NW did slightly better in 4Q of '03, but I'd love to know some recent numbers for January for all the majors.
 
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B747-437B
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:26 am

But hey, they got a new colorscheme so its all ok now!  Big grin
 
PVD757
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:27 am

I'm not 100% sure but I thought AA lost about $135 million......
 
flyf15
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:35 am

That works out to about $350,000 per hour. Not too bad... Big thumbs up
 
StevenUhl777
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:46 am

Certainly not the best news of the day, but I've posted the press release that is on the UAL webpage below:

Chicago, February 26, 2004 - UAL Corporation (OTCBB: UALAQ.OB), the holding company whose primary subsidiary is United Airlines, today filed its January Monthly Operating Report (MOR) with the United States Bankruptcy Court. The company reported a loss from operations of $191 million, which represents an improvement of approximately $140 million over January 2003. Mainline passenger unit revenue improved 8% year-over-year, well ahead of the industry average. Mainline unit costs for January, excluding special charges and fuel, improved 14% year-over-year. The company reported a net loss of $252 million, including $26 million in reorganization expenses. The majority of reorganization expenses were non-cash items resulting from the rejection of aircraft as the company aligns its fleet with the market. UAL met the requirements of its debtor-in-possession (DIP) financing for the twelfth straight month.

"United is continuing to move steadily ahead with its reorganization efforts," said Jake Brace, United’s executive vice president and chief financial officer. "Our financial results show progress compared to January a year ago, and United continued to outpace our competitors in passenger unit revenue improvement, despite the seasonally weak demand across the industry, which we expect to continue in February as well."

UAL ended January with a cash balance of about $2.2 billion, which included $650 million in restricted cash (filing entities only), a decrease of $131 million, that reflects a quarterly retroactive wage payment to International Association of Machinists members of $63 million. As part of its DIP financing agreements, UAL’s lenders required the company to achieve a cumulative EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) of $901 million between February 1, 2003 and January 31, 2004.


Okay...to put all this in perspective, here are the key points from the press release to remember:

- January is one of the slowest (if not THE slowest) month for airline travel
- UAL met the requirements of its debtor-in-possession (DIP) financing for the twelfth straight month.
- Mainline passenger unit revenue improved 8% year-over-year, well ahead of the industry average.
- Mainline unit costs for January, excluding special charges and fuel, improved 14% year-over-year.
- Quote from CFO Jake Brace: "Our financial results show progress compared to January a year ago, and United continued to outpace our competitors in passenger unit revenue improvement, despite the seasonally weak demand across the industry, which we expect to continue in February as well."
- Labor agreements are in place, and have been for some time. Delta still needs a concession plan with pilots, NWA still is working to get another $1b in cuts, and US Airways...well...you know.

I will feel even about UAL when:
- the ACA issue at IAD is resolved
- Pension funding issue resolved (UAL can make payments on non-accellerated schedule, but not under current plan)

I continue to be optimistic about United's future and their plan to reemerge on 6/30 is still on track.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
UALPHLCS
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 10:46 am

You can spin it your way but according to the comapny most of the loss was due to Bankruptcy payments and aircraft rejections. Would you rather have UA accepting aircraft it can't afford? I think not. June 30th the Chapter 11 monkey will be off UA's back.

12 consecutive months we have met or exceeded our DIP provisions. But weren't you all saing this time LAST YEAR UA was finished? Seems like you need to get used to being wrong.

UA Press release.

UAL Corporation Reports January Operating Results

----------------------------------------------------

UAL Corporation today filed its January Monthly Operating Report (MOR) with the U.S. Bankruptcy Court. The company reported a loss from operations of 191 million dollars, which represents an improvement of approximately 140 million dollars over January 2003. Mainline passenger unit revenue improved 8 percent year over year, well ahead of the industry average. Mainline unit costs for January, excluding special charges and fuel, improved 14 percent year over year. The company reported a net loss of 252 million dollars, including 26 million dollars in reorganization expenses. The majority of reorganization expenses were non-cash items resulting from the rejection of aircraft as the company aligns its fleet with the market. UAL met the requirements of its debtor-in-possession (DIP) financing for the 12th straight month.



"Weak demand across the industry makes this the toughest season on our business and negatively impacts our results," says Jake Brace, executive vice president and chief financial officer. "Because of the hard work we've put into restructuring the way we do business over the past year, we have a significantly improved cost structure and we're better positioned to weather the industry's most difficult months."



UAL ended January with a cash balance of about 2.2 billion dollars, which included 650 million dollars in restricted cash (filing entities only), a decrease of 131 million dollars, that reflects a quarterly retroactive wage payment to International Association of Machinists members of 63 million dollars. As part of its DIP financing agreements, UAL's lenders required the company to achieve a cumulative EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) of 901 million dollars between Feb. 1, 2003 and Jan. 31, 2004.
A little less Hooah, and a little more Dooah.
 
artsyman
Topic Author
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Joined: Wed Feb 28, 2001 12:35 pm

RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 12:33 pm

You can spin it your way but according to the comapny most of the loss was due to Bankruptcy payments and aircraft rejections.
****

$191,000,000 Million dollars of the $252,000,000 dollars was purely operational loss. The balance was things like reorganization and write downs. Thus, the actual operational loss daily cash burn was still over $6,000,000 dollars per day.

Whatever revenue environment improvements that UAL may be having, no amount of realistic revenue improvement can wipe off that sort of cash burn. This needs to be done in cuts, and a more realistic operational plan that no longer see's UAL flying everyone everywhere no matter how full or how empty the plane is.

I am suprised that they are still burning this level of money, but as mentioned above, it is important to recognize that January is a rough month, but not rough enough to justify that kind of loss.
 
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KLM11
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RE: Back To Normal: UAL Loses $252 Million In January

Fri Feb 27, 2004 12:42 pm

You've got to give them some credit, I mean at least they want to end in style (New Paint)  Smile Smile Smile Smile Smile

--KLM11
BENAIRE - The Refined Airline
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: Back To Normal: UAL Loses $252 Million In Janu

Fri Feb 27, 2004 1:46 pm

These are terrible results and might lead credence to the prediction of some (most notably Holly Hegeman of Planebusiness) that United will miss its February DIP covenants.

However, given the flurry of promotions within the last three weeks alone, I am inclined UA will meet its Feb. DIP covenants despite these atrocious results.

Us "UA boosters" can take solace in the fact that UAL has now consistently met its DIP covenents for one year... something which many analysts and armchair airliners.net-o-philes kept saying UA was "obviously" going to miss month after month...

But these are particularly distressing numbers.
no wire hangers!
 
worldtraveler
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RE: Back To Normal: UAL Loses $252 Million In January

Sat Feb 28, 2004 3:05 am

meeting DIP covenants will not get UAL out of bankruptcy but merely means the lenders are not ready to pull the plug on UAL's restructuring. UAL has to be consistently profitable in order, or be able to demonstrate how they are going to do so, to convince the ATSB to loan them the billion and a half bucks (or guarantee it) that UAL needs. Quite frankly, I'm very surprised that UAL continues to pin their entire emergence from bankruptcy plan on getting an ATSB application when they were burned by that reliance once before. UAL has not sought any new equity infusion which would certainly help alleviate the ATSB's concerns that all of the risk is being taken in the form of debt.

January is a slow month for aviation but it has been as long as there have been airlines. Further, UAL will continue to beat the industry in unit revenue growth but that is solely because they were at the bottom of the heap a year ago. Crowing about beating industry revenue production means nothing if UAL does not quickly start producing profits. Since UAL has very little presence in the "sun spots" outside of Hawaii that help boost winter revenue, UAL may well not turn profits before the ATSB has to make a decision to commit money to them or not. Further, the Bush administration is adamantly opposed to bailing out pension funds for any group which will only make UAL's emergence from bankruptcy that much tougher.

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