United reports US$779 million loss for FYQ3
Friday, October 24, 2008: With a fuel bill nearly US$1 billion more than the same quarter in 2007, United Airlines’ parent has reported a third quarter loss of US$779 million.
When compared to the US$334 million profit in the third quarter last year, the impact of a higher fuel bill is becoming starkly apparent. This wasn’t helped along by the mark downs of several hedging contracts when fuel plummeted late in the quarter.
“While today’s weak economic environment challenges our industry as demand softens, that same economic environment has caused oil prices to significantly decline from the unprecedented highs we witnessed earlier this year, suggesting significantly lower industry costs and improving operating margin,” said Glenn Tilton, United Chairman, President and CEO.
“We are taking the action required to return to profitability and continue to strengthen our liquidity while simultaneously improving the operating fundamentals to deliver the results our shareholders and customers expect.”
The three months ending September 30th saw the record US$147 for crude oil, but also saw the sudden plummet down in September. United estimates that “non-cash charges” related to fuel hedging came in at US$519 million.
Not including the special items, such as non-cash, net mark- to-market losses on fuel hedge contracts and certain accounting charges, United lost US$252 million for the quarter.
United saw total passenger revenues, excluding special items, increasing by 1.4% for the three months, coming in at US$5.1 billion.
“We are ensuring that United is well positioned in this difficult market: we have minimal capital obligations and we have been able to raise [US]$1.4 billion, including a [US]$125 million financing closed just a few weeks ago in a very tough credit market,” said Kathryn Mikells, United incoming CFO.
“We continue the work to further enhance liquidity and our [US]$3.0 billion in unencumbered assets provide us with critical financial and operational flexibility.”