=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/12/15/f= inancial2209EST0419.DTL --------------------------------------------------------------------- Wednesday, December 15, 2004 (AP) United projects $725 million loss in '05 without labor cuts DAVE CARPENTER, AP Business Writer (12-15) 19:09 PST CHICAGO (AP) -- United Airlines said in a regulatory filing Wednesday that it anticipates a $725 million operating loss in 2005 if it is unable to obtain the additional cuts it seeks from its work force. The projected loss matches the amount the carrier said last month it needed in further labor savings, on top of the $2.5 billion in annual givebacks that were negotiated in bankruptcy in 2003. Earlier this year, before the latest surge in fuel prices and industrywi= de squeeze on revenues, the Elk Grove Village, Ill.-based airline told the federal Air Transportation Stabilization Board it was expecting a $1.27 billion operating profit next year. That estimate was part of its application for a government loan guarantee, which was rejected in June. United laid out the bleak financial picture in a 155-page document filed to support its motion for a federal bankruptcy judge to terminate labor contracts if unions don't come to terms by mid-January on new, lower-cost pacts. So far the pilots' union is the only labor group to reach a tentative agreement. The airline, a unit of UAL Corp., said foregoing those additional savings also would result in an operating profit of just $26 million in 2006 -- just 1.5 percent of its previous projection of $1.72 billion. It said the need for extra labor cuts results from the ATSB's denial, the "extraordinary" increase in fuel prices, persistent downward pressure on pricing and yields, and the need to find private exit financing now that government assistance isn't possible. "United must reduce its labor costs expeditiously," the company said in the document, which was filed to the bankruptcy court a day earlier. "Other legacy carrier have warned that their collective bargaining agreements are no longer affordable because of the persistently low yields and steep fuel costs confronting the industry." Citing the recent bankruptcy filing of ATA, United noted that "even low-cost carriers have been unable to avoid the consequences of the worst economic environment in industry history." The lengthy explanation drew a critical response from the union representing United mechanics. "The memorandum portrays a company that has explored every possible solution and is reluctantly seeking to modify the contracts of its employees," the Aircraft Mechanics Fraternal Association's negotiating committee said in an update to members after Wednesday's bargaining session with the company in San Francisco. "The only real reluctance of UAL is to deal with true restructuring beyond the easy grab of compensation and benefits." United filed for Chapter 11 bankruptcy in December 2002 after more than two years of worsening heavy losses. CEO Glenn Tilton initially said he expected the airline to emerge in about 18 months, but that timetable has been pushed back until roughly the middle of 2005. "Based on the schedule we've filed with the court, and shared with creditors and other stakeholders, we are targeting a mid-year exit," spokeswoman Jean Medina said Wednesday. On the Net: www.united.com ---------------------------------------------------------------------- Copyright 2004 AP