UAL Posts Wider 4Q Loss Amid Higher Fuel Prices Thursday January 27, 1:40 PM EST CHICAGO -- UAL Corp. (UALAQ) reported a wider fourth-quarter loss as expenses rose amid a 58% increase in aircraft-fuel costs. The parent company of United Airlines on Thursday posted a net loss of $664 million, or $5.73 a share, compared with a year-earlier net loss of $476 million, or $4.33 a share. The latest quarter included a $158 million gain from the sale of UAL's remaining shares of online travel site Orbitz, as well as $222 million in reorganization expenses and a $47 million increase in frequent flyer liability, mainly associated with revised estimates. Excluding the items, UAL said it would have posted a loss of $553 million, or $4.77 a share, in the latest quarter. Operating revenue rose 5% to $3.99 billion from $3.8 billion. Airline load factor, or percentage of seats filled, increased 0.3 percentage points to 77.2% as traffic increased 5% on a 4% increase in capacity. The company said in a prepared statement that during the fourth quarter, both passenger unit revenue and yield were essentially flat compared with the year- earlier quarter, "despite a very difficult revenue environment." UAL, which filed for bankruptcy protection in December 2002, said operating expenses climbed 14% to $4.48 billion, with aircraft fuel expenses up 58% at $ 842 million. Mainline operating expenses per available seat mile, or the number of seats multiplied by the length of routes, increased 8%. Excluding fuel, mainline operating expenses per available seat mile rose less than 1%. "As expected, the industry environment continues to be extremely difficult," Chairman, President and Chief Executive Glenn Tilton said in the company's statement. "Record fuel prices and pressure on revenue led to unacceptable results. United has made good progress with more cost reductions already underway. But as we have said, and as this quarter shows without question, we have more work to do," he added. For the full year, UAL reported a net loss of $1.64 billion, or $14.57 a share, narrower than its 2003 net loss of $2.81 billion, or $27.36 a share. Excluding items, UAL said it would have posted a 2004 loss of $1.21 billion, or $10.74 a share. Full-year operating revenue climbed 9.8% to $16.39 billion from $14.93 billion. "We have made further progress in reducing our costs, and will see the benefits of this in 2005," Jake Brace, United's executive vice president and chief financial officer, said in the statement. "Nonetheless, there is significant work still ahead. We continue to believe termination and replacement of all of our pension plans is necessary for United to successfully exit Chapter 11 as a competitive, sustainable enterprise," Mr. Brace added. Looking ahead, United expects first-quarter system mainline capacity to be down about 2% year-over-year. System mainline capacity for 2005 is expected to be about 3% lower than 2004. The company projects first-quarter fuel price, including taxes and expected hedge benefit, to average $1.41 a gallon. The company has 30% of its expected fuel consumption for the first quarter hedged at an average of $1.38 per gallon, including taxes. -Rose K. Manzo; Dow Jones Newswires; 609-520-4345 Roger EWROPS