=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/2003/08= /23/BU293382.DTL ---------------------------------------------------------------------- Saturday, August 23, 2003 (SF Chronicle) United says turnaround has begun/Executive predicts emergence from bankrupt= cy David Armstrong, Chronicle Staff Writer United Airlines expects to emerge from Chapter 11 bankruptcy protection = in mid-spring, according to an upbeat assessment of the carrier's prospects by a senior United executive. John Tague, executive vice president for customers at United's parent company, UAL Corp., said on Friday the airline is seeing an encouraging increase in revenue. Analysts expect the carrier to report a smaller loss in the third quarter than it did in the April-June period. A sustained recovery by United would be good news for Northern Californi= a. United, headquartered near Chicago, has about half of all passengers and flights at San Francisco International Airport, the area's largest, and employs some 16,000 people in Northern California. The company previously estimated it would exit Chapter 11 sometime late this year or early next year. Friday's comments represented the most specific time frame offered by a senior United executive. "The revenue turnaround has begun," said Tague, referring to the peak summer travel season. "We're seeing the company's financial situation gain a great deal of stability." Tague also said the airline's cash flow has "improved dramatically" in recent months. Tague said United's unit revenue -- what the carrier earns flying each seat per mile -- will grow 5 percent to 10 percent above 2002 for the rest of this year. United's upturn is in line with industry developments. The Air Transport Association said this week that unit revenue for the largest carriers jumped 8 percent in July, compared with a decline of 0.4 percent so far this year. United must increase the cash it generates from operations each month to satisfy covenants in the loans that are keeping it in business during bankruptcy. United filed for bankruptcy in December. Tague told a United sales meeting in Denver he was confident that UAL would meet its short-term loan agreements. He declined to predict when United -- which has lost $6 billion since late 2000 -- would again be profitable. United lost a sobering $623 million in the second quarter -- despite receiving $300 million in government aid -- in part due to an 18 percent drop in revenue. Analysts predict a loss of more than $300 million in the third quarter, which ends Sept. 30. Wall Street does not paint a rosy picture of United's prospects, or the near-term prospects of some other major carriers. Ray Neidl, an airline analyst at Blaylock & Partners, put a "sell" recommendation on UAL stock in his Aug. 19 industry update. Neidl's only "buy" recommendations were for low-cost carriers such as AirTran Airways and Alaska Airlines. Large carriers Continental Airlines, American Airlines, Delta Air Lines and Northwest Airlines earned "hold" ratings in his report to investors. "The industry is heading into the slower fall season, and September, post-Labor Day, remains uncertain," Neidl wrote. "The legacy carriers cannot depend too much on yield recovery, though some will occur." Neidl cited "Internet sales, plus the aggressive growth of low-cost carriers, which are controlling pricing," as additional factors holding back the industry's recovery. Moreover, United, USAirways, American Airlines and other carriers were disrupted by this month's huge blackout in the Northeast and upper Midwest. Analysts think that will weaken the airlines' August performance. E-mail David Armstrong at davidarmstrong@xxxxxxxxxxxxxxxx / Chronicle ne= ws services contributed to this report.=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle