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UAL's results miss expectations

January 24, 2007|From the Associated Press

CHICAGO — Eleven months after it left federal bankruptcy protection, the parent of United Airlines announced a narrowed fourth-quarter loss Tuesday. But that wasn't enough to soothe angry investors who sent the stock down after UAL Corp. fell far short of Wall Street expectations.

The airline, which had to ground thousands of flights in December during a series of snowstorms, lost $61 million in the quarter ended Dec. 31, a loss that amounted to 55 cents a share.

Revenue rose 5% to $4.6 billion, but still missed analysts' financial expectations.

On average, analysts surveyed by Thomson Financial forecast a quarterly loss of 35 cents a share and revenue of $4.7 billion.

"I was slightly disappointed," said Calyon Securities analyst Ray Neidl. "A big part of the difference between my expectation, which was lowered, was the severity of the snowstorms and the magnitude of the loss of revenue that was greater than what I was factoring."

Elk Grove Township, Ill.-based UAL, the nation's second-largest airline by traffic, said the series of crippling winter storms lowered its passenger revenue by $40 million.

The carrier had to cancel nearly 4,000 flights in December in large part because the Denver airport -- one of the airline's main hubs -- was closed for two days after a blizzard hit the city just before Christmas.

Earlier in the month, a storm in Chicago forced the airline to cancel nearly 900 flights.

But there was good news.

United posted a $23-million operating profit, including a one-time $6-million gain in the quarter, compared with a $182-million operations loss during the fourth-quarter a year earlier. For the full year, the airline's operating profit was $447 million -- the first time its annual earnings from operations were in the black for at least five years.

In the 11 months since emerging from bankruptcy protection in February, the company earned $25 million, or 14 cents a share.

"This has been an evolving year for the airline industry and a defining year for us at United," Chairman and Chief Executive Glenn Tilton said.

UAL shares, which have spent much of January trading near 52-week highs, fell $3.94, or 8.1%, to $44.81.

The decrease was mirrored across the sector after American Airlines' parent announced a price on a stock offering and it was reported that US Airways Group Inc.'s bid for Delta Air Lines Inc. was losing traction.

Tilton, who has explored the possibility of a merger with Continental Airlines Inc., said Tuesday that he still believed there was a need for industry consolidation.

"Since we have been talking about the benefits of consolidation to the industry well before the new US Air existed, I would think the imperative would be no less so if this new US Air hostile initiative were to fail," he said. "I don't think it changes the underlying conditions I have spoken to for several years."

UAL was in bankruptcy protection during the 2005 fourth quarter, when it lost $16.9 billion, or $145.47 a share -- most of which was related to reorganization charges.

The airline said it didn't expect to increase its fleet in 2007 and decreased its capacity outlook, forecasting nearly flat capacity growth of as much as 1% for the year.

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