United Airlines parent UAL Corp. lost $1.77 billion in the third quarter, its largest loss ever.
The loss, which came to $15.26 a share in the three months that ended Sept. 30, was far wider than United’s year-ago loss of $274 million, $2.38 a share.
According to United, nearly all of this year’s third-quarter loss was due to bankruptcy-related costs. The company said such charges are normal as part of Chapter 11 bankruptcy restructuring. Without the reorganization costs, the company said, it would have made a $68 million net profit in the quarter.
The company hasn’t made money since the second quarter of 2000.
Fuel is now United’s largest expense, surpassing labor. In the third quarter, it cost United $1.1 billion, up from $805 million a year ago.
The company has been operating under Chapter 11 bankruptcy protection for nearly three years and plans to exit in February. It is the largest carrier at Denver International Airport and has about 5,400 employees in the Denver area.
“The fuel cost obviously got them,” said Helane Becker, an analyst at the Benchmark Co. But because United showed a net profit, excluding reorganization expenses, “I think they did a very good job.”
United forecasts a profit next year. However, Becker said, “I don’t think any of the airlines will be profitable next year.”
United’s $1.8 billion in reorganization items included $1.7 billion for the cost of cancelling obligations for aircraft, which the company said do not affect its cash position. It expects to settle these claims for a “minor fraction” of the charges it recorded for its third-quarter financial results.
One of United’s priorities in reorganization was cutting aircraft costs. It expects the aircraft restructuring will save the company an average of $850 million annually between 2003 and 2008. The airline has shrunk its fleet and cut back on flight capacity this year.
United said its operating profit in the quarter totaled $165 million, compared with an $80 million loss in the year-ago quarter.
“We think, in the face of that much higher expense, that the turn-around and operating profit was quite an accomplishment,” United chief financial officer Jake Brace said.
Quarterly operating revenues came to nearly $4.7 billion, up from $4.3 billion a year earlier.
United’s planes were 83.9 percent full on average in the quarter, up from 82.1 percent in the third quarter of 2004. It reduced unit costs, measured by cost per available seat mile excluding fuel and special items, by about 5.2 percent to 7.11 cents.
For the year through Sept. 30, United had a loss of nearly $4.3 billion, $36.82 a share, compared with a $980 million loss, $8.77 a share, in the same period in 2004.
“Continuous improvement across the board, and a focus on how well we execute against every element of our business will make the difference between success and failure at United,” chief executive Glenn Tilton told employees in a recorded message Monday.
Staff writer Kelly Yamanouchi can be reached at kyamanouchi@denverpost. com or 303-820-1488.
