- CHICAGO (Reuters) - UAL Corp.
UAL.N , parent of United Airlines, on Friday reported a hefty quarterly
loss and pessimistic outlook for the key summer travel season, sending
its shares plunging to the lowest level since the mid-1960s.
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- Reporting its eighth consecutive quarterly net loss,
UAL said it expects a "significant" loss in the third quarter
and for the full year because a post-Sept. 11 air travel recovery slowed.
UAL's $341 million second-quarter loss capped a combined $1.4 billion quarterly
loss for the eight largest carriers.
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- "The month-to-month improvements we've seen so far
this year have stalled," Chief Executive Jack Creighton said in a
statement. "In fact, our June unit revenue performance is slightly
worse than it was in May."
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- UAL, the No. 2 carrier behind AMR Corp.'s AMR.N American
Airlines, said it burned through a little less than $1 million per day
on average in the quarter, down significantly from the previous quarter.
However, that "cash burn" rate is expected to rise in the third
quarter and rise even more in the fourth quarter, UAL said.
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- The company said it is concerned about its ability to
refinance $900 million in loans due in the fourth quarter. The carrier
has accessed private capital this year, but the bulk of those limited private
opportunities has been tapped, Chief Financial Officer Jake Brace said
on a conference call.
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- Deep fare discounts throughout the industry, a premature
addition of capacity and the corporate travel slump combined to pressure
June revenue, Brace told analysts and reporters.
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- UAL ended the second quarter with about $2.7 billion
in total cash and can sustain losses for some time as it works on an application
for federal loan guarantees and talks wage cuts with machinists and flight
attendants, Brace said.
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- Shares of Elk Grove Village, Illinois-based UAL fell
$1.13 to $6.40, a drop of 15 percent, on the New York Stock Exchange Friday
afternoon, off an earlier low at $6.36. The shares have lost about 80 percent
of their value since Sept. 11.
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- LOSSES MOUNTING
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- A slump in high-revenue business travel pressured UAL
earnings even before Sept. 11. UAL followed a record $2.1 billion 2001
net loss with a $510 million first-quarter loss.
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- The nation's eight largest airlines posted net losses
of $2.4 billion in the first quarter. AMR Corp. on Wednesday said it lost
nearly a half billion dollars in the second quarter.
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- "Both AMR and United showed the smallest level of
improvement from the first quarter to the second quarter, reflecting their
historic dependence on high-yield business travelers," said Jamie
Baker, airline analyst at JP Morgan.
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- "Where (most) carriers thus far have shown consistent
improvement from the first quarter, the improvement at AMR and United was
nil," Baker said.
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- UAL's second-quarter net loss of $341 million, or a $6.08
per share, compared with a net loss of $365 million, or $6.87 a share,
a year earlier. It lost $392 million, or $6.99 per share, in the second
quarter excluding one-time items, compared with a year-ago loss of $292
million, or $5.50 a share.
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- Analysts expected UAL to lose $6.00 to $8.09 a share,
with a mean loss of $7.13, according to Thomson First Call.
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- Operating revenue fell 18.6 percent to nearly $3.8 billion
in the second quarter, UAL said.
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- UAL has asked the federal government to back $1.8 billion
of a $2 billion loan, the largest request of any U.S. carrier under the
federal bailout program that provided up to $5 billion for direct losses
and $10 billion in loan guarantees.
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- The airline has cut deals with management staff and pilots
for three years of wage cuts if the loan backing is approved. However,
machinists and flight attendants have rejected UAL overtures for similar
cost-cutting.
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- UAL has met with Air Transportation Stabilization Board
officials on its loan application, but talks have not reached a negotiation
stage, Brace said. UAL will continue to pursue talks with machinists and
flight attendants, he said.
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- UAL believes it is in a very different position than
US Airways U.N , which recently received conditional approval for federal
loan guarantees. Brace said UAL has enough collateral in the form of planes
and from other sources to receive federal loan guarantees without ceding
an equity stake.
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