Chicago – United Airlines’ parent corporation said today it lost $1.43 billion during the second quarter, nearly all of which was related to its ongoing effort to exit bankruptcy this fall.
The carrier said it recorded a $1.4 billion charge for reorganization items, including $602 million in costs stemming from turning over its employee pension plans to the federal government’s pension insurer.
Bankruptcy protection likely will shield United from paying more than a small fraction of the restructuring costs, the company said.
The carrier has lost more than $7 billion since it entered bankruptcy in December 2002.
Excluding the reorganization costs, United’s operating earnings grew to $48 million in the quarter from $7 million last year-despite $262 million in higher fuel costs.
“The important number to focus on is our operating earnings, which is the correct measure of the underlying strength of our business,” United CEO Glenn Tilton said in a message to employees today.
Tilton pointed to United’s 5 percent revenue growth – to $4.42 billion from $4.19 billion in the year-ago period – and 3 percent reduction in non-fuel costs as signs that the airline has become more competitive.
“We have put in place a solid foundation, and we are ready to move ahead as a much more competitive company,” Tilton said.
Airline analyst Michael Boyd said United’s operating profit is encouraging. But he said United must prove it can continue its momentum when it no longer has the benefits of bankruptcy protection.
“They’re doing better, there’s no question. But they got there through a Chapter 11 process,” Boyd said. “They’ve got competition that got there without that protection.”
American Airlines’ parent AMR Corp. posted a profit of $58 million in the quarter, while Continental Airlines Inc. earned $100 million. Delta lost $388 million in the quarter, while Northwest Airlines Corp. lost $225 million.
Boyd said United needs to do more to cut non-labor costs and boost revenue – such as adding more Asian routes, for example – to compete with rival legacy carriers and low-cost airlines such as Southwest Airlines, which has been profitable for 57 straight quarters.
United, a unit of Elk Grove Village, Ill.-based UAL Corp., has said it plans to file its reorganization plan with the bankruptcy court as early as next week and has requested a September hearing on the proposal.
Separately, United’s flight attendants picketed at about 20 airports worldwide Thursday to protest the transfer of their pension plan to the Pension Benefit Guaranty Corp. The Association of Flight Attendants contends the move violated its labor contract and has threatened intermittent “CHAOS” strikes.
“The United States Senate has been slow to act for the rights of every United Airlines employee who deserves a dignified retirement for a lifetime of service and now threatens to leave workers’ pensions in crisis while Congress starts its month-long recess,” stated Greg Davidowitch, president of the Association of Flight Attendants at United Airlines, in a statement Thursday.
At Denver International Airport, about 15 flight attendants and a handful of other union representatives picketed near a curbside check-in area, chanting and holding up signs with slogans such as “CHAOS could strike at any moment” and “UAL senior management must go.”
“We’re angry and just trying to convey to the public what’s going on,” said Erin Bassity, a United flight attendant and council representative for the union. “This is something that could potentially affect their flight” if flight attendants go on strike.
United noted Thursday that its other labor groups have “recognized the need to terminate and replace pension plans” and said the AFA leadership “has simply refused to accept reality.”
The carrier said strikes would be illegal under federal law, and it would do whatever necessary to ensure its operations run smoothly.
Travelers at DIA were mixed in their reception of the flight attendants’ picket.
“I can understand their frustration,” said Tony DiTirro, who lives in Denver. But, he said, “I don’t know there’s a whole lot I can do.
“I don’t think I’ll be flying United again until this gets resolved, that’s for sure.”
Sue Myers, who lives in San Ramon, Calif., and was visiting family in the Denver area, said she thinks what is happening to the flight attendants’ pensions is wrong.
“I’m for whatever they need to do to get what is rightly theirs,” Myers said. But, a surprise strike could cause problems for travelers.
“When you have a schedule and you need to get somewhere, you think about yourself,” Myers said.
