S&P: UAL ratings unchanged

UAL Corp., parent of United Air Lines Inc. (both rated D), on Thursday reported a net loss of $459 million ($329 million net loss before bankruptcy related charges) for the first quarter ended March 31, 2004. This was a substantial improvement on the $1.1 billion net loss for the same period in 2003.

The improvement, which was more pronounced than for other large U.S. airlines, reflects 18.7% lower labor expenses (due to concessions and layoffs) and gradually improving airline traffic.

Standard & Poor's said its ratings on both entities remain the same.

S&P said that while much better, UAL's results remain poor in absolute terms, as do those of its peer large U.S. airlines. UAL's pretax margin, before reorganization items, of negative 8.8% was worse than those of its peers, except Delta Air Lines Inc. and US Airways Group Inc.

Worse-than-expected airline industry conditions, including high fuel prices and continued intense price competition from low-cost airlines, have forced UAL to lower its expectations for operating results in 2004. UAL's and United's plans to emerge from bankruptcy continue to depend mostly on whether the Air Transportation Stabilization Board approves the airline's application for a $1.6 billion federal loan guarantee, a critical part of the planned $2.0 billion emergence financing bank facility.

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