UAL Warns of First-Quarter Shortfall

UAL (UAL), the parent company of United Airlines, said Thursday it expects first-quarter results to be "substantially lower" than the Street's expectations, echoing other carriers that a slowing U.S. economy has led to a decline in business travel.

UAL, based in Elk Grove Township, Ill., said it expects to miss the current First Call/Thomson Financial consensus estimate, which has it losing $2.82 a share.

"While our costs for the quarter remain in line with estimates announced in January, our weaker-than-anticipated revenues will make the year-over-year comparison difficult, particularly given first quarter 2000's strong performance. We therefore expect first quarter 2001 results to be well below current Wall Street estimates," the company said.

UAL added that the "the uncertainty surrounding key factors," including as "the breadth and length of the U.S. economic slowdown" and its own pending merger with US Airways (U), as well as the outcome of labor negotiations and the cost of fuel, prevents the company from providing any specific estimates.

The airline industry has recently been grounded by earnings warnings from the likes of Delta (DAL), which said Tuesday it expects to lose between $85 million and $110 million, or 70 cents to 90 cents a share, in the first quarter. Northwest (NWAC) issued its own profit warning a day later.

In its statement this morning, UAL also said it was experiencing a "continued delay in the settling of labor contracts," as a result of the "industrywide instability in labor relations." TheStreet.com's Holly Hegeman recently examined the outlook for airline union negotiations, as well as the potholes in the United-US Airways merger.

UAL stock recently rose 97 cents, or 2.76%, to $36.07 in midday trading on the New York Stock Exchange, while US Airways rose $1.25 cents, or 3.72% to $34.85. Delta climbed 36 cents, or 0.9%, to $40.25, while Northwest gained 50 cents, or 2.53%, to $20.25.

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