United Airlines will have the biggest quarterly operating loss in company history in the fourth quarter, and projections for 1991 “are even more troubling,” Chairman Stephen Wolf says.
Wolf blamed the projected loss on “the alarming increase in the price of fuel and a significant softening in the economy” that have plagued other airlines as well.
In a letter last week to employees of the nation’s second-largest airline, Wolf said the airline industry as a whole expects a huge fourth-quarter loss for 1990.
Wolf said United “is one of the best-positioned carriers in the country to be facing this disturbing economic environment,” but he asked employees to keep operating expenses to a minimum in 1991.
Despite the projections, Wolf said the carrier has no plans to lay off employees or scale back operations.
A United spokesman said the carrier would not reveal the size of its operating loss until it releases its fourth-quarter earnings statement Jan. 31.
The airline’s biggest quarterly operating loss ever was $192 million, reported for the second quarter of 1985, said company spokesman Joseph Hopkins.
United will continue its policy of acquiring lucrative routes of struggling airlines, Wolf said.
United said Monday that the U.S. and Japanese governments have reached an agreement that will allow the carrier to continue its Tokyo-Chicago service until March 2.
The decision comes a week after Japanese officials refused to grant landing rights to United in retaliation for U.S. restrictions on Japanese carriers at Chicago’s O’Hare International Airport.
Monday’s decision means United’s six direct flights a week between O’Hare and Tokyo will continue uninterrupted.
It also means that Japan Air Lines and Nippon Cargo Airlines each will be permitted five flights weekly between Tokyo and the United States.
In addition, United Parcel Service will be permitted five flights to Tokyo and Delta Air Lines will be allowed to start service between Los Angeles and Tokyo by Feb. 7.
Wolf also said that United hopes to negotiate new labor contracts soon with its pilots’ union and other unions whose contracts have expired.
But, despite a plea from the airline, a labor chief said Monday that the pilots union is not willing to submit contract issues to binding arbitration.
Doing so now would amount to giving the company a “blank check,” said F. C. Dubinsky, head of United’s unit of the Air Line Pilots Assn.
The union will re-evaluate arbitration as contract negotiations progress, Dubinsky said.