United reports $221.85 million loss in September on $1.47 billion of revenue, warns of problems next quarter

By Jeff Pines

Washington, Oct. 28 - United Air Lines Inc. parent UAL Corp. reported a $221.85 million loss in September on revenues of $1.47 billion, and more trouble is brewing ahead, according to a monthly report filed with the Securities and Exchange Commission Thursday.

The airline company's operating loss for the month was $117.59 million.

These figures compare with a $54.61 million loss on revenues of $1.64 billion in August.

Sky-high fuel prices coupled with weak revenue mean the company may not be in compliance with the EBITDAR covenant of its $1 billion debtor-in-possession club facility for the fourth quarter, United warned.

Failure to meet the covenant would put the company in default. It said it is holding talks with its lenders.

For the third quarter United reported a net loss of $274 million on $4.3 billion of revenue with an $80 million operating loss.

"United's financial performance, like the rest of the industry, was severely affected by low yields and the soaring cost of fuel during one of the traditionally most profitable periods. During the third quarter, the company burned through almost $1 million per day on an operating basis," said Jake Brace, United's executive vice president and chief financial officer, in a news release.

"Even though our unit revenue performance was on par with our peers, the pricing environment prohibits us from recouping high fuel costs. Given the urgency of United's situation and the stark financial reality in the entire industry, United believes that it will have no choice but to seek significant additional labor savings beyond terminating and replacing our pension plans," he said.

United ended the third quarter with an unrestricted cash balance of $1.5 billion.

The company had an effective tax rate of zero for the third quarter, which makes UAL's pre-tax loss the same as its net loss.

United filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

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