This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ UAL Posts Biggest Loss of U.S. Airlines May 2, 2003 By REUTERS Filed at 1:41 p.m. ET CHICAGO (Reuters) - UAL Corp., the bankrupt parent of United Airlines, on Friday reported the biggest quarterly shortfall of any major U.S. air carrier as the war in Iraq discouraged travel and raised fuel costs. The $1.3 billion net loss topped that of rival AMR Corp. (AMR.N), parent of American Airlines, which posted a $1 billion first-quarter loss last week and narrowly averted bankruptcy for the third time after winning wage concessions from labor. ``It could have been a lot worse, which is the good news. The bad news is, it is not a lot better,'' said Richard Bittenbender, senior credit officer at Moodys Investors Service, of UAL's results. UAL (UALAQ.OB), which filed the largest bankruptcy in U.S. airline history in December, said its loss was $14.16 per share, compared with a loss of $510 million or $9.22 per share a year earlier. Operating revenue fell to $3.18 billion in the quarter from $3.29 billion a year earlier. ``The first quarter was particularly difficult, given travelers' concerns about the conflict in Iraq, the weak economy and a fierce low-fare environment, as well as speculation about our company's future -- speculation that is now abating,'' said Chief Executive Glenn Tilton. Others agreed with Tilton's assessment that while the first-quarter numbers were pretty bleak, fears of outright liquidation are lessening. ``UAL posted an unexpectedly weak Q1, but there are definite signs of light at the end of the tunnel,'' said Lehman Brothers analyst Gary Chase. Chase cited big labor concession packages just approved by a bankruptcy court, forthcoming government aid and falling fuel prices as factors that now tip the scales in favor of an eventual successful exit from bankruptcy. WAIVER WATCH United said it ended the first quarter with $1.6 billion in cash, of which $644 million was restricted for payment of certain obligations. Its cash burn rate from operations was about $2 million daily during the first quarter, but double that excluding $92 million drawn on its DIP loans. UAL's debtor-in-possession lenders, who put up $1.5 billion in loans for the restructuring effort, are Citigroup Inc. (C.N), J.P. Morgan Chase & Co Inc. (JPM.N), CIT Group Inc. (CIT.N) and Bank One Corp. (ONE.N). If UAL cannot meet the cash-flow requirements set up in the agreements, the institutions must vote to allow the covenants to be waived. UAL said both domestic and transatlantic bookings have improved. But the company's Pacific operations, which account for a big chunk of revenue, have been suffering due to Severe Acute Respiratory Syndrome, or SARS. The airline has substantially pulled back flights to the region. United, based in Elk Grove Village, Illinois, said it expects capacity for the balance of the year to be lower than previously announced, but did not give a figure. It said capacity will be down 14 percent for April and 20 percent for May. Capacity is measured by available seat miles, or the number of seats available on airplanes times the number of miles flown. In a move critical to emerging from Chapter 11 protection, United on Wednesday secured court approval for labor cost cuts of $2.56 billion per year over the next six years, which will substantially lower its cost per available seat mile. OTHERS POST LOSSES, TOO UAL's loss included $248 million for the restructuring and another $137 million in write-downs for UAL's investment in and guarantee of debt for Air Canada (AC.TO). Excluding those items, the loss totaled $958 million, or $10.11 per share, United said. Analysts on average expected United to report a loss of $12.08 per share excluding items, according to Thomson First Call. Most major airlines are suffering big losses, though not as big as UAL's and AMR's, as the Iraq war hurt transatlantic travel and the pneumonia-like virus SARS weighed heavily on transpacific routes. The U.S. airline sector rose sharply on Friday morning after Merrill Lynch analyst Michael Linenberg upgraded a number of stocks, saying the worst may be over. The American Stock Exchange's airline index (.XAL) rallied over 10 percent. Shares of UAL were up 8 cents, or 5.9 percent, at $1.26 in midday trading. http://www.nytimes.com/reuters/business/business-airlines-united-earns.html?ex=1052897962&ei=1&en=32aae7f360de811f 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 onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company