UAL Suffers $92.3-Million Loss in Its First Quarter
UAL Corp., the owner of United Airlines, announced Thursday that it lost $92.3 million in the first three months of the year because of the bad economy and tough competition.
At the same time, the airline company also announced that John C. Pope, UAL vice chairman and chief financial officer, will take over as president and chief operating officer of United Airlines.
UAL Chairman Stephen M. Wolf will be relinquishing the United Airlines president’s title. He will continue to be chief executive and president of UAL, however.
Despite an improvement from a $157-million loss recorded a year earlier, “these results are, by any measure, woefully unsatisfactory,” Wolf said.
The loss for the first quarter of 1992 came to $3.86 per share, compared to $7.05 in the year-earlier period, UAL said on the day of its annual meeting in Denver.
“The effects of the recession are still being felt,” Wolf told shareholders. “Our first-quarter results, while poor by any standard, were not as bad as we had anticipated when the quarter began and were a substantial improvement over last year.”
He said first-quarter operating revenue rose 16% to $2.97 billion from $2.56 billion because of a 55% increase in international traffic.
Wolf blamed the poor showing on the “anemic” U.S. economic recovery and intense industry competition, which held down airline ticket prices.
He predicted that revenue would drop significantly in the second quarter because of a new industrywide fare structure introduced by archrival American Airlines, but he said the outlook should improve in the third quarter.
Wolf said that giving up the title of United president will allow him to concentrate on the company’s strategic plans and overall quality.
Pope will be responsible for airline operations, marketing, customer service and human resources.
Wolf also announced a new United international division with subdivisions focusing on the Atlantic, Latin America and Pacific operations.
“Our primary strategic focus will remain on international expansion,” he said. “This area of the company will grow by about 35% this year and for all of 1992 will represent 35% of our full-year capacity.”
United last year began flying lucrative London routes acquired from now-defunct Pan American World Airways, and it more recently picked up most of Pan Am’s Latin American route structure.
On the domestic front, Wolf said, “United will continue to explore potential acquisitions of both routes and facilities that appear to hold unusual promise.”
He said, though, that “the era of large acquisitions is behind us,” adding that UAL will focus on consolidating and developing recent acquisitions.
