UAL REPORTS $286 MILLION FIRST-QUARTER 2012 LOSS EXCLUDING SPECIAL CHARGES; $448 MILLION LOSS INCLUDING SPECIAL CHARGES
United Continental Holdings, Inc.
reported a first-quarter 2012 net loss of $286 million or $0.87 loss per share, excluding $162 million of net special charges consisting primarily of integration-related costs. Including special charges, UAL reported a first-quarter 2012 net loss of $448 million or $1.36 loss per share.
UAL first-quarter consolidated passenger revenue increased 5.5 percent year-over-year. First-quarter consolidated passenger revenue per available seat mile (PRASM) increased 5.2 percent compared to the same period in 2011.
First-quarter consolidated fuel expense increased 20.8 percent, or $557 million, year-over-year.
Consolidated unit costs (CASM) holding fuel rate and profit sharing constant and excluding special charges and third-party business expense for first-quarter 2012 increased 0.6 percent year-over-year. First quarter consolidated CASM increased 8.3 percent year-over-year.
UAL ended the first quarter with $7.8 billion in unrestricted liquidity.
UAL converted to a single passenger service system, a single website and a single loyalty program on March 3, 2012.
"This was a difficult quarter, but we made significant progress with our integration and we're now able to serve our customers as a single airline," said Jeff Smisek, UAL's president and chief executive officer. "I want to recognize my co-workers for their hard work during a challenging time, and thank our customers for their continuing support. We are now on the steep back slope of our integration and can look forward to delivering more benefits from the merger in the remainder of the year."
First-Quarter Revenue and Capacity
For the first quarter of 2012, total revenue was $8.6 billion, an increase of 4.9 percent year-over-year. First-quarter consolidated passenger revenue rose 5.5 percent to $7.5 billion, compared to the same period in 2011.
Consolidated revenue passenger miles (RPMs) and consolidated capacity (available seat miles) for the first quarter of 2012 both increased 0.3 percent year-over-year, resulting in a first-quarter consolidated load factor of 78.1 percent.
Consolidated yield for the first quarter of 2012 increased 5.2 percent year-over-year. First-quarter 2012 consolidated PRASM increased 5.2 percent compared to the same period in 2011.
Mainline RPMs in the first quarter of 2012 decreased 0.2 percent on a mainline capacity increase of 0.2 percent year-over-year, resulting in a first-quarter mainline load factor of 78.5 percent. Mainline yield for the first quarter of 2012 increased 4.5 percent compared to the same period in 2011. First-quarter 2012 mainline PRASM increased 4.1 percent year-over-year.
"Our revenue results were negatively impacted by the integration of our revenue management and booking systems, which included reducing our booking levels so we could better serve our customers during the reservations conversion," said Jim Compton, UAL's executive vice president and chief revenue officer. "We look forward to leveraging our new systems and world-class network to improve revenue results for the remainder of the year."
Passenger revenue for the first quarter of 2012 and period-to-period comparisons of related statistics for UAL's mainline and regional operations are as follows:
Cargo and other revenue in the first quarter of 2012 increased 0.8 percent, or $9 million, year-over-year.
Total operating expenses, including special charges, increased $705 million, or 8.6 percent, in the first quarter compared to the same period of 2011, including a $557 million increase in fuel costs year-over-year. First-quarter 2012 operating expenses, excluding fuel, profit sharing, third-party business expense and special charges, increased $54 million, or 1.0 percent, year-over-year. Third-party business expense was $65 million in the first quarter.
Consolidated CASM, excluding special charges and third-party business expense, increased 7.3 percent and mainline CASM, excluding special charges and third-party business expense, increased 7.4 percent in the first quarter of 2012 compared to the same period of 2011. First-quarter consolidated and mainline CASM, including special charges, increased 8.3 and 8.7 percent year-over-year, respectively.
In the first quarter, consolidated and mainline CASM, excluding special charges and third-party business expense and holding fuel rate and profit sharing constant, increased 0.6 percent and 0.1 percent, respectively, compared to the results for the same period of 2011.
"I want to thank my co-workers for their efforts to control costs in a challenging economic environment with significant integration hurdles," said John Rainey, UAL's executive vice president and chief financial officer. "We have tremendous assets at United - most notably, our people - which will help us achieve our goal of sustained and sufficient profitability."
First-Quarter Liquidity and Cash Flow
UAL ended the first quarter with $7.8 billion in unrestricted liquidity, comprised of $7.3 billion of cash, cash equivalents and short-term investments and $500 million of undrawn commitments under a revolving credit facility. During the first quarter, the company generated $124 million of operating cash flow and had gross capital expenditures of $403 million. The company made debt and net capital lease payments of $502 million including $92 million of prepayments in the first quarter.
Passenger Service System Cutover
On March 3, United converted to one passenger service system in the single largest technology conversion in aviation history. On the same day, United also launched a single website, united.com, introduced a single loyalty program, MileagePlus, and made numerous policy and procedure changes to become a single airline for its customers. The conversion required 1.7 million hours of training, migrating more than 17 million passenger records and 32 million MileagePlus accounts, and upgrading more than 12,000 workstations. As a result of the systems conversion, United has much greater flexibility to deploy aircraft on routes best suited to their capabilities and every customer service agent can help every customer, providing more consistent service across the network.
Notable First-Quarter 2012 Accomplishments
United recorded U.S. Department of Transportation domestic on-time arrival rate of 80.1 percent and a system completion factor of 99.1 percent for the quarter. For international flights, United recorded an on-time arrival rate of 74.2 percent. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
The company achieved a tentative agreement with United flight attendants, which they subsequently ratified. Passenger service employees chose to be represented by a union, and the company and the union will now begin joint negotiations. The company and its pilots' master executive councils agreed to an extension of the transition and process agreement originally reached prior to the completion of the merger.
UAL raised $892 million of debt through the issuance of enhanced equipment trust certificates at an average interest rate of 4.37 percent, the lowest average rate in history for this type of security. The debt is being used to finance the acquisition of four new Boeing 787-8 and 14 new Boeing 787-900ER aircraft and to refinance the debt relating to three Boeing 787-900ER aircraft currently in the company's fleet.
United announced new service from its Newark hub to Istanbul, Turkey and from Chicago to Sarasota, Fla. and from Denver to Fairbanks, Alaska. The company also announced service from San Francisco to Washington Reagan; and from Washington Dulles to Honolulu.
The company paid $265 million in 2011 profit-sharing to co-workers, who also earned cash incentive payments for on-time performance totaling more than $8 million during the quarter.
FORTUNE magazine named United Airlines the most admired airline on its annual airline-industry list of the World's Most Admired Companies.
United and Chase launched the premium MileagePlus Club co-brand card in March, building on the strong performance from the MileagePlus Explorer card launched last July. The company also introduced the MileagePlus Gift Card Exchange, a program that enables members to convert the remaining value of unused or partially used retail gift cards into award miles.
United has Economy Plus Seating on 75 percent of its entire mainline fleet, including on all long-haul international Boeing 757-200 aircraft.
The company inducted three Next Generation Boeing 737-900ER narrowbody aircraft into its fleet and continued to retire older, less-efficient models including three Boeing 737-500 aircraft.
The company continued to install flat-bed seats in first and business class on its international fleet, and now has the new seats on 144 aircraft, more than any other U.S. carrier.
United broke ground on the first phase of a three-phase redevelopment project at Houston's George Bush Intercontinental Airport.
Source = United Airlines