UAL reports January loss of $151 million

By Ellen Chang

Houston, Feb. 25 - UAL Corp., parent of United Air Lines, reported an operating loss of $151 million for January.

The airline's mainline passenger unit revenue in January increased 3% over the same period a year ago, which the Chicago-based airline said outperformed the industry. Unit costs in January increased 1% over the same month last year on flat capacity. Excluding fuel, unit costs in January decreased 6% year over year.

The company reported a net loss of $326 million, including $138 million of reorganization expenses.

"While we made progress in our restructuring during the month by getting in place a portion of the long-term cost savings we need, we still have work to do, including further lowering our costs, concluding our labor negotiations, and the difficult but necessary work of resolving our pension issues," said Jake Brace, executive vice president and chief financial officer, in a written statement.

United said January has historically been a seasonally weak month. This year was additionally impacted by the weak domestic revenue environment and very high fuel prices, it added. Fuel expense for the month was $63 million higher than January 2004 on flat capacity.

The company ended January with a cash balance of $2.0 billion, which included $855 million in restricted cash. The cash balance decreased $108 million during January due to a quarterly Success Sharing reward to employees of $22 million and seasonally weak cash flow.

The company received a waiver from its DIP lenders for the January monthly EBITDAR covenant, as well as an extension of the maturity date of its DIP loan from June 30 through Sept. 30, a reduction in the interest rates United must pay under the loan, and a potential reduction in the minimum cash balance requirement to $600 million from $750 million if United meets an EBITDAR milestone.

United filed for bankruptcy on Dec. 9, 2002 in the U.S. Bankruptcy Court for the Northern District of Illinois. Its Chapter 11 case number is 02-48191.

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