United posts record loss

Dave Carpenter

Friday, Jan. 31, 2003 | 10:08 a.m.

CHICAGO -- The parent company of United Airlines reported a worst-ever quarterly loss of $1.5 billion today, capping off a year of record losses that pushed it into Chapter 11 bankruptcy in December.

UAL Corp.'s dismal results capped off a fourth-quarter loss of $3 billion for major U.S. airlines, aside from US Airways, which also is in bankruptcy and did not issue a report.

The industry has been in crisis since the Sept. 11, 2001, terrorist attacks compounded existing problems from an economic downturn, and recovery prospects remain murky. For the year, the nation's major airlines reported a combined loss of more than $9 billion.

CEO Glenn Tilton said United had done everything within its control to reduce its industry-leading costs in 2002 and will make more "difficult but critical" changes in bankruptcy. He did not yet disclose specifics of the company's proposed blueprint for becoming leaner and profitable again, pledging only that United will "compete aggressively" in 2003.

But the carrier warned that it expects another sharp loss for the first quarter in view of weaker international bookings, especially in the Pacific region, a traditional United strength. A war in Iraq also would worsen its predicament, it acknowledged.

The fourth-quarter deficit left UAL with a net loss of $3.2 billion for the year -- just shy of the industry-record $3.5 billion suffered by American Airlines' parent AMR Corp. in 2002.

UAL's net loss for the last three months of the year was $1.47 billion, or $20.70 a share, compared with a fourth-quarter 2001 loss of $308 million, or $5.68 a share.

Excluding certain items, United said the pro-forma loss was $9.65 per share -- better than Wall Street expected. Analysts surveyed by Thomson Financial had estimated the per-share loss at $13.81.

Revenue fell 18 percent to $3.5 billion from $2.9 billion.

The loss easily exceeded the carrier's previous worst result, a $1.16 billion loss during the third quarter of 2001, when terrorist attacks accelerated United's losses and threw the industry into a tailspin from which it has yet to recover.

It was United's tenth straight quarterly loss. Since last turning a profit in the second quarter of 2000, United has lost $5.5 billion.

For the year, the net loss amounted to $53.55 per share, compared with a year-earlier loss of $40.04 a share. Revenue sank 11 percent to $14.3 billion from $16.1 billion.

UAL shares fell 3 cents to $1.04 in morning trading today on the New York Stock Exchange.