UAL Reports a Wider Loss
United Airlines parent UAL Corp., which exited bankruptcy protection three months ago, said Monday that its first-quarter loss widened as spending for fuel jumped by a third to a record.
UAL had a loss of $306 million excluding a bankruptcy accounting benefit, compared with a $302-million loss a year earlier. Sales rose 14% to $4.47 billion, Elk Grove, Ill.-based UAL said.
Higher ticket prices and more passengers couldn’t compensate for increases in fuel and labor spending, and United said it would cut annual expenses beginning next year by $400 million more than originally planned. It had trimmed $7 billion in annual costs during its 38 months of bankruptcy protection.
“The quarter was a major disappointment,” said Ray Neidl, a New York-based analyst for Calyon Securities. “These guys have a huge job to do getting down their unit costs. The high fuel price environment aggravates that problem.”
UAL shares fell $3.47, or 9%, to $35.50. They have fallen about 1% since trading began Feb. 2.
Spending for fuel climbed 33% from a year earlier to $1.07 billion as consumption was little changed. Excluding fuel, costs rose 3% per seat flown a mile. United said it would cut some administrative jobs, reduce spending for advertising, combine cargo and airport operations and adjust scheduling to get more use out of each plane.
The company declined to say how many jobs might be eliminated or how much spending on marketing and promotion would be cut.
“We know we can do more to reduce our costs,” Peter McDonald, United’s chief operating officer, said during a conference call with analysts. “We are attacking nonfuel costs with a comprehensive set of strategies.”
