UAL Loss Increases Sharply in Quarter; Tops $103 Million

UAL Inc., the parent of United Airlines, said Monday that it lost $103.1 million in the first quarter of 1986, a dramatic increase over the $661,000 that it lost in the comparable period last year.

The holding company’s consolidated operating revenue rose 23% to $1.96 billion in this year’s first quarter from $1.59 billion in the first quarter of 1985.

Richard J. Ferris, chairman and chief executive of both the parent company and the airline, said the consolidated net loss was due to “a combination of greater airline operating losses, foreign exchange losses and increased interest expense.”

He added that the weakening exchange rate of the U.S. dollar relative to the Japanese yen was the major factor in a foreign exchange loss of $44.8 million in the quarter. Increased borrowing and the addition of the debt of Hertz Corp., which UAL acquired last summer, resulted in a $58.9-million rise in consolidated interest expenses, compared to the year earlier.

The airline lost $107.3 million in the quarter, compared to a net loss of $3.9 million in year-ago quarter. Airline operating revenue rose to $1.48 billion from $1.43 billion in the first quarter of last year.

Ferris said the first quarter’s 14% rise in airline operating expenses--to $1.62 billion from $1.42 billion--reflected increased flights: added operations at United’s Denver hub and expansion of the company’s Pacific division with its purchase of Pan American’s Pacific routes earlier this year.

Industry observers also said United suffered dramatically in the first quarter of this year from competition in Denver, which is its second-largest hub after Chicago. It competes in Denver with Continental and Frontier, which was recently acquired by People Express.

“It is a saga of three airlines in a two-airline town,” one observer said.