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da atwonline
United posts $779 million loss but touts nonfuel 'cost control'
Wednesday October 22, 2008
United Airlines parent UAL Corp. reported a third-quarter net loss of $779 million, reversed from a net profit of $334 million in the year-ago period, blaming the bulk of the result on a $519 million noncash net loss on fuel hedge contracts caused by the recent drop in oil prices.
The net loss excluding the hedging losses and noncash accounting charges was $252 million. Chairman, President and CEO Glenn Tilton said that lower fuel prices will have "a significant positive impact" on earnings going forward, though he cautioned that "the forces [driving down] fuel prices are also affecting the global economy," likely leading to reduced demand.
Speaking to reporters and analysts, Tilton added that the weak economy and "volatile" fuel costs have led the airline to institute a "cost-conscious culture, which in many ways is not what our reputation has been historically. . .At the end of the day we've got to run this business to make a real margin and if that means that the business has to be smaller, so be it."
The carrier continues to reduce capacity rapidly, planning a mainline cut of 11.5%-12.5% in the fourth quarter including a 14.5%-15.5% lowering domestically. Incoming CFO Kathryn Mikells said UA has "significant flexibility to adjust capacity" and will make further reductions if necessary.
Executive VP and COO John Tague commented that UA is focused "on the basics of running a good airline," evidenced by an "unbundling" of fares that is "resetting the value proposition for both elite and nonelite passengers" and a "change in how we approach cost control." He noted that third-quarter mainline CASM excluding fuel and special items was flat year-over-year at 7.71 cents.
Third-quarter revenue rose 0.7% to $5.57 billion, but expenses soared 24.3% to $6.07 billion owing almost entirely to an 85.9% leap in fuel costs to $2.46 billion that included both higher year-over-year fuel expenditures and losses on hedges. Operating loss was $491 million, reversed from an operating profit of $656 million last year.
Mainline traffic fell 5.7% to 29.17 billion RPMs on a 4% drop in capacity to 35.08 billion ASMs, producing a load factor of 83.2%, down 1.5 points. Mainline passenger yield lifted 6.6% to 14.63 cents as PRASM heightened 4.5% to 12.2 cents and CASM jumped 30.8% to 14.75 cents.
by Aaron Karp
da atwonline
United posts $779 million loss but touts nonfuel 'cost control'
Wednesday October 22, 2008
United Airlines parent UAL Corp. reported a third-quarter net loss of $779 million, reversed from a net profit of $334 million in the year-ago period, blaming the bulk of the result on a $519 million noncash net loss on fuel hedge contracts caused by the recent drop in oil prices.
The net loss excluding the hedging losses and noncash accounting charges was $252 million. Chairman, President and CEO Glenn Tilton said that lower fuel prices will have "a significant positive impact" on earnings going forward, though he cautioned that "the forces [driving down] fuel prices are also affecting the global economy," likely leading to reduced demand.
Speaking to reporters and analysts, Tilton added that the weak economy and "volatile" fuel costs have led the airline to institute a "cost-conscious culture, which in many ways is not what our reputation has been historically. . .At the end of the day we've got to run this business to make a real margin and if that means that the business has to be smaller, so be it."
The carrier continues to reduce capacity rapidly, planning a mainline cut of 11.5%-12.5% in the fourth quarter including a 14.5%-15.5% lowering domestically. Incoming CFO Kathryn Mikells said UA has "significant flexibility to adjust capacity" and will make further reductions if necessary.
Executive VP and COO John Tague commented that UA is focused "on the basics of running a good airline," evidenced by an "unbundling" of fares that is "resetting the value proposition for both elite and nonelite passengers" and a "change in how we approach cost control." He noted that third-quarter mainline CASM excluding fuel and special items was flat year-over-year at 7.71 cents.
Third-quarter revenue rose 0.7% to $5.57 billion, but expenses soared 24.3% to $6.07 billion owing almost entirely to an 85.9% leap in fuel costs to $2.46 billion that included both higher year-over-year fuel expenditures and losses on hedges. Operating loss was $491 million, reversed from an operating profit of $656 million last year.
Mainline traffic fell 5.7% to 29.17 billion RPMs on a 4% drop in capacity to 35.08 billion ASMs, producing a load factor of 83.2%, down 1.5 points. Mainline passenger yield lifted 6.6% to 14.63 cents as PRASM heightened 4.5% to 12.2 cents and CASM jumped 30.8% to 14.75 cents.
by Aaron Karp