Chicago – United Airlines’ parent UAL Corp. reported a wider first-quarter loss Monday, despite the completion of its 38-month bankruptcy overhaul. It blamed the shortfall on record fuel prices, stock-based compensation expense and a change in accounting methods.
Company executives, while encouraged by strong revenue improvements, said United’s costs remain too high. They pledged to cut $400 million by next year by streamlining functions, spending less on advertising and eliminating an unspecified number of salaried and management jobs.
The parent of the nation’s No. 2 carrier officially reported a $22.9 billion on-paper profit for the quarter, but that total was misleading.
The figure reflected the reversal of on-paper losses recorded for all of last year, when unsecured claims that would ultimately be settled for a fraction of the charges resulted in a $21 billion loss for 2005.
The more representative figure, the company said, was a loss of $306 million before reorganization items versus a loss of $302 million incurred during the first quarter a year ago.
United did not provide a per-share figure, citing the switch to a new accounting basis, although chief financial officer Jake Brace said results were “clearly worse” than analysts expected.
United said its performance in Denver has continued to improve. Its load factor, a measure of how full planes are, is up, as is its yield, a measure of financial performance. United has been working toward shortening the length of time it takes to “turn” an aircraft from arrival to departure in Denver and other cities.
The company plans to reduce its spending on advertising, marketing promotions, sales and discount expense, including in Denver.
Record fuel costs continued to weigh on the company’s bottom line, costing United $314 mil lion more than in the first quarter a year ago. Results also were hurt by the recognition of $69 million for stock-based compensation expense and by new accounting policies, which remeasured the value of the company’s assets and liabilities and reduced net earnings by about $160 million.
United’s first-quarter operating loss was $171 million, a $79 million improvement over the same quarter last year.
Denver Post staff writer Kelly Yamanouchi contributed to this report.
