This article from NYTimes.com has been sent to you by psa188@juno.com. /-------------------- advertisement -----------------------\ Share the spirit with a gift from Starbucks. Our coffee brewers & espresso machines at special holiday prices. http://www.starbucks.com/shop/subcategory.asp?category_name=Sale/Clearance&ci=274&cookie_test=1 \----------------------------------------------------------/ United Airlines' Loss for 2001 Breaks Record February 2, 2002 By LAURENCE ZUCKERMAN United Airlines said yesterday that it lost $308 million in the fourth quarter, resulting in an annual loss in 2001 of $2.1 billion, the largest ever by a single carrier. United, like the rest of the airline industry, experienced a drop in passenger traffic after the Sept. 11 terrorist attacks. Revenue during the quarter declined 39 percent, to $2.95 billion from $4.79 billion in the period a year earlier, as the airline cut its capacity 20 percent. The quarterly loss, which was equal to $5.68 a share, was reduced by two one-time gains totaling $332 million after taxes. The gains were from federal aid and the proceeds of the sale of United's stake in the Galileo computer reservation system. Without the special items, the UAL Corporation (news/quote), United's parent, lost $640 million, or $11.74 a share, during the quarter. In the period a year earlier, it lost $71 million, or $1.40 a share. Still, the loss in the most recent quarter was narrower than the loss of $14.96 a share that analysts had expected, according to Thomson Financial/First Call. The loss was reduced by lower costs, particularly for salaries, fuel, travel agency commissions and aircraft maintenance. Following the lead of other carriers, which have begun cautiously adding back capacity after the cuts in September, United said it would add 127 daily flights by April. But its overall capacity cuts will remain deeper than those at most of its competitors. "While our financial results this quarter reflect a decline in both business and leisure travel," John W. Creighton Jr., the chief executive of UAL, said in a statement, "during the fourth quarter we saw signs that air travel is slowly beginning to recover." Still, the company predicted a "significant loss" for the current quarter. And although carriers like Continental Airlines (news/quote) and Delta Air Lines (news/quote) have said they will be profitable later this year, United was unwilling to make a similar forecast. United was already hurt worse than other carriers by the downturn in business travel that had begun before Sept. 11. Now, with the industry in its worst crisis ever, some experts are convinced that United will be forced to restructure under bankruptcy protection. But others say the carrier will be able to turn itself around without court-supervised reorganization. Mr. Creighton, who was drafted from the UAL board to run the company in October after his predecessor resigned under pressure, is seeking concessions from employees worth several billion dollars over several years. Employees hold about 55 percent of UAL stock, which they received for concessions in 1994. Talks with the unions have been delayed by contract negotiations between the airline and the International Association of Machinists, which represents 15,000 mechanics and 30,000 ground workers. The mechanics are scheduled to vote on a proposed settlement later this month. If the agreement is ratified, it will speed up the negotiations over concessions, Frederic F. Brace, the chief financial officer at UAL, told analysts yesterday. Labor accounts for 38 percent of the airline's expenses, the company said. Mr. Brace said that in addition to employee concessions, the airline's financial recovery plan would require a new injection of cash. He raised the possibility that United would apply for a federal loan guarantee under a $10 billion program enacted after the attacks. United has cut its budget for capital expenditures by 50 percent this year, to $1.2 billion, and has no plans to buy new aircraft next year. It had $2.6 billion in cash at the end of the year and was losing an average of $10 million a day during the quarter. But in December it lost less cash than in December 2000, Mr. Brace said, a fact that analysts found encouraging. Mr. Brace deflected questions about a possible bankruptcy filing, saying that the airline was focusing on its recovery plan. "We recognize we need to turn the situation around," he said. "But here at United we are fortunate to have significant assets and liquidity that will provide us the time necessary to put our cost structure right." Shares of UAL fell $1.27 yesterday, to $13.43. On Sept. 10, the day before the attacks, they closed at $30.82, and they fell as low as $10.33 on Nov. 12. http://www.nytimes.com/2002/02/02/business/02AIR.html?ex=1013697534&ei=1&en=587ad5e54e0c1664 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact Alyson Racer at alyson@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company