=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2002/04= /20/BU86992.DTL ---------------------------------------------------------------------- Saturday, April 20, 2002 (SF Chronicle) Trying to regain altitude/United Airlines struggles with continuing losses George Raine, Chronicle Staff Writer United Airlines, suffering in an anemic economy and yet to regain its footing in the wake of the Sept. 11 terrorist attacks, said yesterday it lost $510 million during the first quarter as operating revenue declined by more than 25 percent. The loss represented United's seventh consecutive quarterly deficit. It was exceeded only by a $1.16 billion loss during the third quarter of 2001, when travel and much of the nation's commerce were frozen for a time after the attacks. The airline reported a $313 million loss for the comparable period of 2001. With half of all passenger flights, United is the dominant carrier at San Francisco International Airport. It also serves the Oakland and San Jose airports. The carrier, the main subsidiary of UAL Corp. of Elk Grove, Ill., employs 20,000 people in the Bay Area. The nation's nine largest carriers, including American Airlines and Delta Air Lines,lost a combined $2.4 billion during the first three months of the year. Dallas' Southwest Airlines, a low-cost, short-haul carrier, was the only major airline to turn a profit in the quarter, although its net income dropped by 82 percent to $21 million. With the big carriers posting losses, some ticket prices are rising. Delta, US Airways Group and Continental Airlines yesterday matched American, United and Northwest in raising round-trip leisure fares in the United States $20 as they tried to revive their slumping business for the second time this month. Analysts who follow United say they expect the airline to apply for a federal loan guarantee -- and the company said it is considering doing so. United's quarterly loss puts added pressure on its negotiations with its labor unions for wage concessions. Those talks will begin next week, said Jack Bruce, UAL's chief financial officer. United Chief Executive Officer John W. Creighton said, "We certainly are seeing signs that our industry's situation is beginning to improve, but there is still a long way to go." He said United has made some financial progress since Sept. 11 by reduci= ng operating expenses and capital spending. But complications in negotiating labor contracts have "impeded our progress on reducing salary and other operating costs," he said. On March 5, United Airlines' machinists approved a revised five-year contract and averted a threatened strike that would have pushed the carrier into bankruptcy. The pact was ratified by 59 percent of the voting membership, whose union, District 141-M of the International Association of Machinists, is based in South San Francisco. The negotiations were barbed, and the notion that there would be future concessions hovered over the table. Creighton made a reference to concessions again yesterday, saying United will "work collectively and creatively with our union leadership and all employee groups to continue with United's recovery plan." Analyst Seth Glickenhaus, a senior partner with Glickenhaus & Co. in New York, pointed out United's unique position -- it is in effect owned by many of its employee groups. "Of all unions that should be reasonable, it is the United unions," he said, "because they own the company. It's in their best interests that it not = go broke," said Glickenhaus. United reported a first-quarter operating loss that was smaller than what many analysts had predicted. The airline also said its cash burn rate of $5 million per day was half that of the previous quarter. The operating loss for the nation's second-largest carrier, after American, was $487 million ($8.81 per share), beating the $10.24 consensus estimate by analysts surveyed by Thomson Financial/First Call. Passenger revenue was down 28 percent, reflecting schedule cutbacks ordered in the fall. The net quarterly loss amounted to $9.22 per share, compared with a loss of $313 million ($5.97) a year ago. Operating revenue was $3.3 billion, down 26 percent from $4.4 billion a year ago. United's shares yesterday closed up 16 cents, at $15, on the New York Stock Exchange. America West and Alaska Air also reported quarterly losses yesterday. America West, based in Tempe, Ariz., had a net loss of $358 million ($10.62), in the quarter, compared with a loss of $13 million (38 cents) a year earlier. Alaska Air, based in Seattle, had a first-quarter loss of $34.4 million ($1. 30), compared with a loss of $33 million ($1.25) a year ago. Bloomberg News contributed to this report. / E-mail George Raine at graine@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle