=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/2003/05= /03/BU49185.DTL ---------------------------------------------------------------------- Saturday, May 3, 2003 (SF Chronicle) UAL in the hole/Losses stack up, more cuts sought David Armstrong, Chronicle Staff Writer United Airlines, reorganizing under bankruptcy protection, reported Frid= ay a staggering loss of $1.34 billion for the first three months of this year, the second-worst quarterly loss in company history. The figure was surpassed only by the carrier's $1.5 billion loss in the fourth quarter of 2002. United's parent company, UAL Corp., has lost $4.5 billion since the start of last year. Separately, the ailing airline asked its Bankruptcy Court late Friday for permission to close a maintenance center in Oakland, where it has 700 employees, and one in Indianapolis, where it employs 1,380. Some jobs would be transferred to San Francisco International Airport, United's largest maintenance center, with 3,600 workers. Some work would be contracted out, according to United spokesman Chris Brathwaite. The airline did not say how many jobs might be lost. The court is expect= ed to rule on the request next week. United, the world's second largest airline and the dominant airline at S= an Francisco International Airport, attributed the first-quarter bleeding to the dismal conditions that affect the airline industry. U.S. domestic carriers lost a record $10 billion last year and might surpass that this year. Fear of flying since the Sept. 11 terrorist attacks, the lingering economic slump, high fuel prices, the hassle factor at security- minded airports, the war in Iraq and now fear of severe acute respiratory syndrome have combined to create intense turbulence for airlines. United was hit especially hard on its formerly lucrative transpacific flights out of San Francisco and Los Angeles, where fears of SARS have depressed demand. In response, the airline cut back transpacific service. Daily service between SFO and Shanghai, for example, has been reduced to three flights a week. "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," said Glenn Tilton, UAL's chairman, president and chief executive officer. "Cost reduction has been our most important priority. Now we are intensifying our focus on revenue-enhancing initiatives," Tilton said. In a move critical to emerging from Chapter 11 bankruptcy protection, United this week secured court approval for labor cost reductions of $2.56 billion per year over the next six years. The company also won the right in labor talks to fly additional small regional jets and contract out some maintenance functions. United previously said it will start a low-fare carrier later this year. The carrier-within-a-carrier, code-named Starfish, is designed to compete with low-cost carriers such as Southwest Airlines, JetBlue Airways and ATA, which have grabbed market share from major airlines. United said that booking trends have improved since the first quarter ended and that it will show dramatic savings in labor costs thanks to cuts that took effect Thursday. In the largest airline bankruptcy filing in history, United entered Chapter 11 on Dec. 9. American Airlines, the world's largest airline, has teetered on the edge of bankruptcy, while US Airways emerged from Chapter 11 last month. E-mail David Armstrong at davidarmstrong@xxxxxxxxxxxxxxxx, Chronicle news services contributed to this report. / UAL Corp.'s net losses 1Q 2003: -$1.3 billion 4Q 2002: -1.5 billion 3Q 2002: -889 million 2Q 2002: -392 million 1Q 2002: -510 million Source: UAL Corp. ---------------------------------------------------------------------- Copyright 2003 SF Chronicle