UAL Hit Hardest In Third Quarter
United Airlines parent UAL Corp. today announced a $1.16 billion third quarter loss, including special items related to the Sept. 11 terrorist attacks. Absent those items, the company dropped $542 million. Its stock now is trading near a 14-year low.
United's negative results, though the most severe, highlight the industry's ongoing problems, including poor unit revenues and passenger yields impacted by lower fares and fewer business travelers. Traffic in general has been returning, but not quickly enough to offset cash burn-rates or to improve the industry's near-term outlook. In most cases, federal aid doled out in accordance with the Air Transportation Stabilization Act was not enough to offset losses.
"Our results this quarter reflect the sharp falloff in both business and leisure travel that has occurred, and we anticipate continued weakness in both of these sectors into next year," said John W. Creighton, UAL's recently appointed chairman and chief executive officer.
Unit revenues were down nearly 13 percent and passenger yield was off 14 percent. Overall passenger revenues declined 20 percent in what easily was the worst quarter in company history. UAL at the end of the quarter, however, still had $2.7 billion in cash on hand.
Delta Air Lines also reported earnings today. While it did not bleed nearly as much red ink as United?one-time items actually improved its overall financial situation?it nevertheless lost $259 million. The carrier turned a $273 million profit a year earlier.
Delta said the Sept. 11 attacks eroded its revenues by $400 million. Overall, quarterly revenues were almost $1 billion lower than last year. Similar to United, Delta finished the quarter with $2.8 billion in available cash.
Several carriers reported earnings yesterday, including Continental Airlines. Regarded as one of the nation?s healthiest, Continental eked out a $3 million profit, inclusive of all items. But a daily cash burn of $4 million to $5 million and significantly lower yields clearly will lead to a fourth quarter loss. "The focus today is on cash," said president Larry Kellner, in a conference call with reporters. "We are trying to figure out the optimal structure to minimize our daily cash burn."
American Airlines parent AMR Corp. reported a $414 million loss earlier this week. America West yesterday reported a net loss of $31.7 million. Northwest Airlines also reported yesterday, posting a $19 million profit, buttressed by $249 million in federal aid. US Airways, however, lost $766 million in the quarter and nearly $1 billion for the first nine months of the year.
Southwest Airlines and Alaska Airlines, both of which reported earnings a few weeks ago, were the two most profitable, posting $151 million and $25.3 million gains, respectively.
In other news, Continental today said it will begin levying a $10 fee per passenger for paper tickets issued on itineraries for which electronic tickets are available. The fee--C$15 in Canada and #7 in Great Britain--will not be added to tickets issued by travel agencies. The carrier said the new fee is meant "to offset the processing costs associated with paper tickets." Continental matched American Airlines, which in April had implemented a similar $10 surcharge on certain tickets not issued by travel agencies (BTN, April 9).