TRANSPORTATION : UAL Posts Quarterly Loss Due to Higher Fuel Costs

UAL Corp., parent of United Airlines, Thursday reported a loss of $123.5 million for the fourth quarter and sharply lower profits for the year due to soaring jet fuel prices and the slowing economy.

The loss contrasted with a profit of $6.8 million in 1989. Revenue in the fourth quarter rose to $2.80 billion from $2.37 billion.

The fourth-quarter results benefited from the sale of nine jets--four 727-100s and five DC-8s--which along with other property sales added $68.1 million to the bottom line.

But jet fuel costs jumped by $268 million, creating the red ink for the airline.

“The alarming increase in the price of fuel and a significant softening in the economy took its toll on the airline industry in the fourth quarter,” UAL Chairman Stephen Wolf said. “Although Wall Street accurately predicted the financial impact, the reality is still a very painful one.”

The quarterly shortfall pulled the year’s profits down substantially. UAL said it earned $94.5 million for all of 1990, less than a third of 1989’s $324.2 million or $14.96 a share.

Revenue for the year rose to $11 billion from $9.8 billion.

United, the nation’s second-largest airline, cautioned that the first quarter looks grim too, as war rages on in the Middle East and would-be travelers stay put.

“While the recent reductions in the price of fuel are encouraging, we continue to be very concerned about the near-term economic environment and the effect the Mideast war may have on travel plans in the first quarter,” Wolf said.

UAL said it paid an average of $1.12 for a gallon of jet fuel in the fourth quarter, up from 69.5 cents in the same period in 1989. The price has since come back down to about 70 cents a gallon.

Industry analysts said UAL’s earnings were generally in line with forecasts. The airline had notified employees earlier this month that it expected the record quarterly operating loss.

Paul Karos, First Boston Corp.’s airline analyst, said UAL’s fourth-quarter net loss was actually lighter than the $7-per-share loss he expected.

But he is reviewing first-quarter estimates for United and other airlines based on what he expects will be weak February traffic numbers as fears of terrorist attacks slash ticket purchases.

For UAL in particular, Karos said he now expects both domestic and international traffic to fall in February.