UAL says it's ready if merger is best
United Airlines parent UAL Corp. is in "very good position" to pair up with another carrier despite a money-losing fourth quarter, CEO Glenn Tilton said Tuesday.
Tilton wouldn't tip his hand about the status of talks widely reported to be under way with Delta Air Lines Inc., which is looking at potential combinations with either United or Northwest Airlines Corp.
But he did nothing to dampen speculation the nation's second-biggest airline is pushing hard to team up with Delta or, if those talks fail, another carrier such as Continental Airlines Inc.
On a conference call to discuss UAL's $53 million fourth-quarter loss, Tilton said the company's position on consolidation hasn't changed in three years.
"We believe the industry can benefit from constructive consolidation, and the work we have done improving the company puts us in a very good position to participate in that consolidation as we see fit," he said.
Chief Financial Officer Jake Brace said the company's efforts to sell off its maintenance division and frequent-flier plan also are still proceeding.
The fourth-quarter loss was less than expected but nevertheless reflected the damage that high oil and jet fuel costs are doing to the bottom line of United and other U.S. airlines. The company also cited stormy December weather as weighing on results, causing a raft of holiday flight cancellations.
The net loss for the last three months of 2007 amounted to 47 cents a share and was slightly improved from a loss of $61 million, or 55 cents a share, in the same quarter a year earlier.
Revenue was $5.03 billion, up 9.7 percent from $4.59 billion a year ago, partly due to higher fares.
Despite its first loss since the first quarter of 2007, the Chicago-based company posted net income of $403 million for the full year -- its first annual profit since 2000. It officially reported a $23 billion on-paper gain for 2006, but that reflected a formal settling of accounts from its three-year bankruptcy reorganization and was not a true profit.
UAL said fourth-quarter operating expenses rose by $531 million, or about 12 percent, because of a $359 million increase in fuel costs. It said the severe winter storms that took place in Chicago and Denver in December increased costs for staffing and for glycol, a deicing chemical. Analysts have blamed the staffing issues in part on pilot labor unrest.
The company is making a $250 million distribution to shareholders today -- a move that angered unions, which believe the company is unduly focused on management and shareholders and should be sharing profits with employees who made major concessions in bankruptcy.