UAL Halts Dividend Amid Travel Decline

UAL Corp., parent of United Airlines, said Thursday that it has indefinitely suspended the cash dividend on its common stock.

UAL joins the growing list of American companies that are choosing to sacrifice their dividend payments to preserve cash. The move comes as the airline industry struggles with decreased demand for air travel after the Sept. 11 terrorist attacks.

Dividend cuts and suspensions have soared this year as the economy has weakened and more companies have faced financial difficulties.

Through August, 68 companies had cut their dividends, up from 45 in the same period last year, according to Standard & Poor’s Corp. Also, 58 companies omitted their dividends entirely in that eight-month period, up from 36 in the same period in 2000.

A more common move for many companies has been to put off dividend increases: The number of firms raising their dividends in the first eight months totaled 929, down 12% from a year earlier and down 21% from the 1999 period, S&P; data show.

UAL (ticker symbol: UAL) had been paying a 20-cents-a-share annual dividend, or 5 cents a quarter. At the stock’s current price--down 34 cents to $17.91 a share Thursday on the New York Stock Exchange, before the news was announced--the annualized dividend yield was a mere 1.1%.

Still, the loss of the dividend is another blow to UAL shareholders, who have seen the stock price dive 63% from $48 a year ago. All airline stocks plummeted once trading resumed following the attacks.

James Goodwin, UAL chairman and chief executive, said Thursday that he asked that his pay be suspended for the rest of the year, and the company’s board agreed. UAL board members also chose to forgo compensation through year-end.

UAL also said it named Frederic Brace chief financial officer of UAL and United Airlines. Brace succeeds Douglas Hacker, who will focus on his position as president of United NewVentures, a UAL subsidiary, the company said.