MINNEAPOLIS - United Airlines said Tuesday it lost $382 million during the first quarter as it raced passengers to see who could pull back faster on flying. Passengers won, though United has been aggressively cutting costs to try to keep up.

United reduced flying by 11.3 percent during the quarter that ended March 31. But traffic fell 13.2 percent. The percentage of seats filled fell by 1.7 percentage points.

United said demand fell across all types of travel, but it was especially hurt by a 30 percent drop in first- and business-class travel.

The loss reported Tuesday by the unit of UAL Corp. was $2.64 per share, versus a loss of $549 million, or $4.55 per share during the same period last year. United said it lost $579 million, or $4 per share, not counting non-cash hedging gains and some accounting charges. Its loss under a different set of accounting changes was $4.45 per share.

Revenue fell 21.7 percent to $3.69 billion, from $4.71 billion a year ago.

Analysts surveyed by Thomson Reuters were expecting a loss of $4.45 per share on revenue of $3.8 billion.

United has been working to get costs in line with reduced flying, and it cut $1.1 billion in overall expenses compared with the same quarter last year. It raised nearly $500 million by maneuvers such as borrowing against planes and engines, moving a cargo facility in Chicago and issuing equity.

United ended the quarter with $2.46 billion in unrestricted cash, up $418 million from the end of 2008. The carrier has scheduled debt and capital lease payments of $665 million for the rest of the year.

United collected $259 million during the quarter on fees for things such as charging for more desirable seats, checked bags, and ticket changes — an average of $14 in fees per passenger.

United said it would reduce mainline flying 9 percent to 10 percent for all of 2009. It has reduced its budget for non-aircraft capital spending by $100 million, to $350 million for 2009.

Cargo revenue fell 43.1 percent to $124 million.

UAL shares rose 26 cents, or 4.4 percent, to $6.13 in morning trading.

 

DALLAS - Continental Airlines Inc. reports first-quarter earnings on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Continental is expected to follow American Airlines and Southwest by posting a first-quarter loss, as the carriers fly into the headwinds of recession.

Traffic on Houston-based Continental's mainline flights fell 11.2 percent in the first three months of the year compared with year-ago figures.

And things seemed to get worse as the quarter went along.

Continental has said that including its regional flying operations, revenue per available seat mile fell 4.8 percent in January, 11.5 percent in February and about 20 percent in March. (RASM, as this statistic is called, measures how well an airline generates revenue relative to its size.)

Like other carriers, Continental has cut capacity, which should help limit the loss. Continental offered 7.6 percent fewer mainline seat miles in the first quarter.

BY THE NUMBERS: As of Monday, analysts expected Continental to report a first-quarter loss of $1.19 per share on sales of $2.98 billion, according to a survey by Thomson Reuters. However, the analysts expect the airline to recover and earn a profit for the full year.

Last year in the first quarter, Continental lost $80 million, or 81 cents per share, on revenue of $3.57 billion.

ANALYST TAKE: Matthew Jacob, an analyst with Majestic Research, estimated that Continental's revenue as a ratio of capacity fell 12 percent in the quarter. He said revenue per passenger trends at Continental's Houston hub were lagging while hubs at Newark, N.J., and Cleveland were in line with companywide averages.

WHAT'S AHEAD: By cutting capacity, airlines hope to regain pricing power that they've lost during the recession. But the carriers have found it hard to raise fares.

According to Rick Seaney, chief executive of travel Web site FareCompare.com, the carriers have tried twice this year to raise fares but the first one failed and the second — started by Continental — appeared in trouble Monday, after Continental and American rolled back their increases.

On the international front, Continental is switching from one team of airlines, SkyTeam, to another — the Star Alliance, which also includes United and Lufthansa. The move could foreshadow a combination with United, which the airlines discussed last year before rising fuel prices and growing losses at United parent UAL Corp. caused Continental to walk away from the talks.

U.S. regulators have given tentative approval to antitrust immunity for Continental to cooperate with Star Alliance members on international flights. But on Monday, European officials announced they wanted to take a closer look at SkyTeam, including its dealings with Continental, and at one other alliance.

The airlines have sought antitrust immunity to jointly set prices and schedules. But the European Commission, a regulatory arm of the European Union, suggested that the airlines were cooperating too closely and possibly breaking antitrust rules on trans-Atlantic flights.

Like other airlines, Continental is also looking for new sources of revenue including on-board entertainment.

Spokesman Dave Messing said Continental is nearly done equipping its international fleet with video-on-demand for TV shows and movies, and domestic aircraft are being outfitted with satellite TV to allow viewing of live TV.

Eventually, passengers will be able to send and receive e-mails and text messages, but the service won't include full Internet access, Messing said. Other carriers are beginning to roll out Web surfing for a fee — up to $12.95 per flight on American and Delta.

STOCK PERFORMANCE: Shares of Continental fell 51 percent in the first quarter, from $18.06 to $8.81, but many rivals did worse. In the same period, shares of American Airlines parent AMR plunged 70 percent, US Airways dropped 67 percent, United parent UAL fell 59 percent, and Delta matched Continental's 51 percent decline.

Continental shares closed Friday at $13.56. They have doubled since an early March trough.

 

Real good memo on the Delta Net that does a little bit of explaining, but from the Press Release I thought this was some good news.

“Delta’s operations generated more than $600 million in cash during the quarter, reflecting our
employees’ continued focus on liquidity preservation, productivity improvements, and achieving our
targeted synergy benefits,” said Hank Halter, chief financial officer. “Despite a decline in our expected
revenue outlook, we continue to project a profit for the year, as well as grow our unrestricted liquidity to
more than $6 billion by the end of the year.”

We reported unchanged liquidity of $5B this quarter - same as last quarter and project to have another $1B by the end of the year. If if he is only half right, that would be nice!

 

I will say I noticed that we only had 5 billion in cash. Yes, we did not go though anymore this quarter, but we did not improve on it. It is almost twice the next competitor, but we have spent some cash.
If my memory serves me correctly, we started this merger with 6.9 billion. That is a good burn rate.

 

Firms hedge on a lot more than just fuel. Many firms gamble with future foreign exchange rates. Volkswagen were hedged against future rate drops and lost a lot of money when the US dollar tanked a few years ago.

It's a risky business and you can't rely on it.

AL

 

I don't care how you cut it, this is a huge loss for anyone. Plus United fared a lot better this quarter than Delta which surprised me. Waiting to see how CAL does tomorrow. Southwest loss was minimal when compared to Delta. Tough market but Delta's burning through cash quickly. Looks like a repeat to me.

 

I might be reading it wrong but it looks like United lost over $500 million in operating losses and made a little on the fuel hedge. Delta broke even on a operating basis and lost on the fuel hedging.

 

And DELTA is double the size of UAL

 

You are reading it wrong. United lost on its hedging.

 

Well, SWA had a lower hedge, and they are as big as DAL.


I guess that's why we have the exact same amount cash as we did at the start of the quarter.