United Continental to cut 600 jobs, reports 4Q loss
The parent of United Airlines reported a $620 million quarterly loss on Thursday and about 600 job cuts as travelers stayed away following its problems earlier in the year with absorbing Continental.
It posted a full-year loss of $723 million, too, almost wiping out its $840 million profit from 2011. The fourth-quarter loss worked out to $1.87 per share. Excluding special items the loss would have been 58 cents per share, matching expectations of analysts surveyed by FactSet. Superstorm Sandy cut $85 million from its results in 2012's final quarter. A year ago the company lost $138 million, or 42 cents per share.
The 600 job cuts involve management and administrative positions throughout the company, including its Chicago headquarters, said company spokeswoman Megan McCarthy.
The positions involve voluntary buyouts, the elimination of open positions, as well as involuntary layoffs that are expected to begin in early February, she said.
Jeff Smisek, chairman, president and CEO of United Continental Holdings Inc., told employees of the cuts in a memo.
“2012 was the toughest year of our integration, and I know it was a tough year for you and for our customers,” Smisek said in the memo. “Despite the integration pains we endured, we accomplished an enormous amount.”
In December, United announced a 7 percent reduction in its officer head count. On Thursday, the company said it was necessary to trim another 6 percent.
“A portion of that reduction will come from a voluntary program, as we try to minimize involuntary reductions,” Smisek wrote. “As always, we will treat impacted co-workers with dignity and respect through this process, and I regret the necessity for this action.”
United's switch to a single passenger-information system last year caused problems with its website and frustrated some of its most lucrative customers when they couldn't get upgrades to first-class seats. Some of its customer service workers at airports struggled with new software on their computers, creating long lines.
Those problems drove potential customers away. Traffic fell 3.2 percent in the fourth quarter. United reduced the amount of flying it did, too, so its planes were actually slightly fuller.
The company is aiming to put those issues behind it. It has said the technology issues are solved.
“With much of our integration behind us, our significantly improved operational performance and our increasing customer satisfaction, we can now go forward as one company,” said Jeff Smisek, chairman, president, and CEO of United Continental Holdings Inc.
Revenue for the full year ticked up slightly to $37.15 billion.
“We see improvement this year and expect UAL to narrow the gap between itself and peers on revenue performance,” S&P Capital IQ analyst Jim Corridore wrote in a note.
But he added that the company's “ongoing integration challenges keep us cautious on the shares, despite our positive view on the overall U.S. airline industry.”
ŸDaily Herald Business Writer Anna Marie Kukec contributed to this report.