UAL Corp's fourth-quarter loss widened to US$308 million as fares and sales fell at United Airlines in the recession and aftermath of the Sept. 11 attacks.
The company forecast a "significant" loss this quarter.
The second-largest airline's fourth-quarter loss of US$5.68 a share widened from the year-earlier US$71 million, or US$1.40, UAL said. Sales fell 38 percent to US$2.95 billion. UAL shares slid US$1.27, or 8.6 percent, to US$13.43.
UAL's daily losses narrowed to about US$10 million from US$15 million in the previous quarter, as the carrier joined rivals Delta Air Lines Inc and American Airlines parent AMR Corp in reporting signs of returning demand.
United's biggest challenge is reducing costs, analysts said, and the company is talking to unions about employee concessions.
"They clearly have a formidable task in front of them," said Deutsche Banc Alex Brown analyst Susan Donofrio, who rates the company "market perform" and owns no UAL shares.
The company wouldn't quantify the "significant" first-quarter loss, and analysts already were forecasting a loss of US$9.96 a share, based on a survey by Thomson Financial/First Call.
UAL reported weakness in reservations for around Feb. 20, the day its mechanics threatened to strike if there's no agreement with the company on a new contract.
In January, passenger revenue for every seat flown a mile fell as much as 17 percent below last year. The carrier's flight capacity in this quarter will be 19 percent lower than in the year- earlier quarter.
The results for last year's fourth quarter include a US$166 million government grant from a program that distributed US$5 billion to airlines after the hijackings.
US airlines had fourth-quarter losses of US$3.2 billion, excluding US aid, analysts estimate. UAL's fourth-quarter labor costs rose 3 percent to US$7.08 billion, while operating expenses increased 6.5 percent to US$19.9 billion.
"They did a little bit better job of cutting costs," said ABN Amro analyst Ray Neidl, who has a "hold" rating on UAL and owns shares. "Still, revenues were down significantly and it was still a big loss."
The carrier's passenger traffic, or miles flown by paying passengers, declined 24 percent in the fourth quarter as the airline reduced flight and seat capacity 20 percent. The airline's yield, a measure of fares, fell 20 percent.
"We did see a steady improvement in our financial results over the quarter," UAL Chief Financial Officer Jack Brace told analysts on a Webcast.
The airline plans to add 127 flights to its schedule in April to meet rising customer demand. The carrier will also recall some flight attendants and furlough fewer pilots. United will add 17 flights from Chicago's O'Hare airport and 26 flights at Denver International Airport, with other additions expected at Los Angeles and San Francisco. The carrier will also add more transcontinental and international flights.
The company said it completed a US$775 million private debt financing and is using proceeds to refinance debt on aircraft leases. UAL ended the quarter with cash of US$2.6 billion.
UAL stock has declined 67 percent in the past year.
Excluding the government grant and expenses related to the attacks, the carrier's loss was US$640 million, or US$11.74 a share.
The per-share results are calculated using the 55 million shares outstanding, not including an additional 61 million held by workers, the company said.
For the full year, UAL had a loss of US$2.1 billion, or US$40.04 a share, compared to net income of US$50 million, or US$0.04 a share in 2000. Sales fell 17 percent to US$16.14 billion from US$19.35 billion.
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