EARNINGS: Cost Cuts Take UAL Out of Red : Cost Cuts Take UAL Out of Red Zone
Cost reductions helped United Airlines’ parent company make a $3-million profit from January through March, marking the company’s first profitable first quarter since 1989, it said Tuesday.
UAL Corp.’s results included a $24-million gain from aircraft sales. But it was a steep drop in operating costs that put the nation’s largest airline into the black, analysts said.
The $3 million in earnings compares to a net loss of $97 million for the same quarter a year earlier. The year-ago results included $38 million in special charges.
Revenue rose 4.4% to $3.3 billion from $3.2 billion, UAL said.
UAL benefited from a 7.4% wage cut workers accepted as part of an employee buyout of the company last July. Those savings, plus other cost reductions, lowered United’s operating expenses by 6.1% to 8.49 cents per available seat mile from 9.04 cents, UAL said. The figures exclude certain buyout-related charges.
Operating profit for the quarter was $38 million, contrasted with a loss of $36 million a year ago.
On a per-share basis, Chicago-based UAL lost money for the first quarter after accounting for dividends on preferred stock and dividends on convertible preferred stock issued to the employee stock ownership plan.
The results amount to a net loss of $1.05 per share, compared to a net loss of $4.37 per share a year earlier. Analysts’ average loss estimate was $1.74 per share.
UAL shares jumped $2.875 to $117.50 on the New York Stock Exchange.
Lockheed Martin Corp., formed by the recently completed merger of defense contracting giants Lockheed and Martin Marietta, said its first-quarter earnings fell 42%, mostly because of expenses from the $10-billion deal.
For the three months ended March 31, the company, whose headquarters are in Bethesda, Md., earned $137 million, or 62 cents a share. That compares with a combined profit of $235 million, or $1.08 a share, reported by the separate companies for the same period a year ago.
Revenue for the quarter was $5.6 billion, up 12.1% from $5 billion for the period last year.
The latest results include a one-time charge of $110 million, or 50 cents per share, to cover expenses related to the merger, which closed March 15.
Chevron Corp. said its first-quarter earnings fell 7% despite increased revenue from higher oil prices and a one-time profit from the sale of some land.
For the first three months of the year, the San Francisco-based oil company earned $396 million, or 61 cents a share, down from $424 million, or 65 cents a share for the period last year.
The latest figures include a one-time gain of $63 million, primarily from the sale of land in Japan. The year-ago results include a one-time expense of $36 million partly related to soil cleanups at Chevron gas stations.
Excluding those adjustments, Chevron’s first-quarter income improved 18% to $459 million, or 70 cents a share, from $388 million, or 60 cents a share, a year earlier.
Los Angeles-based Occidental Petroleum Corp. reported a big jump in net income for the 1995 first quarter, to $178 million, or 49 cents a share, from a loss in the same quarter last year of $40 million, or 19 cents a share. Earnings from oil and gas increased to $60 million, from $4 million in 1994, while Oxy’s chemical-unit earnings boomed to $307 million from $22 million in the same quarter of 1994. Sales in all divisions increased from $2.1 billion in the first quarter of 1994 to $2.7 billion this year.
RJR Nabisco Holdings Corp. earnings edged up 2% in the first quarter as improvement in the food business offset a decline in tobacco results.
The conglomerate said it earned $198 million for the quarter, up from $195 million a year ago. But its earnings per share declined to 51 cents from 60 cents because more shares were issued since the first quarter last year.
Quarterly revenue slipped to $3.54 billion from $3.57 billion a year earlier.
“We had a strong performance by the food business,” said Charles Harper, chairman and chief executive. But, Harper said, that was offset by sharply reduced shipments of tobacco, which he attributed to changes in shipment patterns to wholesalers and volume losses on less expensive domestic brands.
Operating earnings from tobacco worldwide were off 3% as sales fell 9% to $1.7 billion and sales volume skidded 13%.
In the Nabisco food business, operating profit rose 12% as sales rose 8%.
Avery Dennison Corp. reported record first-quarter net income of $34.5 million, or 65 cents per share, up from $25.2 million, or 45 cents per share a year earlier. The Pasadena company’s revenue increased 16% to $773.2 million from $667.7 million. Charles D. Miller, chairman and chief executive, said: “First quarter net income improved significantly due to stronger sales and continued cost control. All three business sectors reported double-digit sales and income growth. Both domestic and international operations significantly increased sales and income with international operations reporting particularly strong results.” Avery Dennison makes self-adhesive materials, tapes and labels, office products, tags, retail systems and specialty chemicals.
Omaha-based California Energy Co. said its first-quarter earnings rose 12%, reflecting its $950-million acquisition of Magma Power Co. California Energy said net income was $9.61 million, or 21 cents a share, compared to a profit from operations of $8.61 million, or 20 cents, for the quarter a year ago. Per-share results from both quarters reflect payments of preferred dividends.
