Updated from 11:03 a.m. EDT
Plagued all summer by flight
cancellations, surging oil
prices and labor strife,
, the corporate parent of
, said that it would post a loss for its third quarter and likely for its fourth.
The company was expected by Wall Street analysts to earn 97 cents a share in the quarter ending Saturday and 63 cents a share in the December quarter, according to consensus estimates compiled by
First Call/Thomson Financial
. But the stock, which closed Thursday at $44, just 32 cents above its previous 52-week low, had already lost more than 25% of its value since early July, before the company said it had cancelled 4,800 flights and
warned of lower-than-anticipated third quarter earnings. UAL ended Friday regular trading down $2, or 5%, at $42.
"The third quarter has been a difficult period for United," James Goodwin, UAL chairman and chief executive, said in a news release. "The disruptions to our operations throughout the quarter greatly inconvenienced our customers and front-line employees, reducing revenue significantly.''
James Higgins, analyst for
Donaldson Lufkin & Jenrette
, said the size of the discrepancy between consensus estimates and a loss indicates the warning stems more from sagging revenues than from increased costs.
For the industry, "as third-quarter numbers are reported, I think there's going to be some skepticism about how much of this is coming from United and isn't stable," Higgins said. He rates the stock market perform, the equivalent of hold, and his firm has performed no underwriting for the company.
Though the announcement did less damage to the stock than might ordinarily be expected from a negative earnings variance of almost $1 a share, it came as salt in the
wounds of the Chicago-based holding company, whose primary subsidiary is the airline. The company, which began the summer attempting a $4.3 billion
, had just begun mending its subsidiary's image.
In recent weeks, United had settled contract talks with its
pilots, issued televised apologies and bonus frequent flyer miles to customers and boasted of a dramatic decline in cancelled and delayed flights.
But if July's earnings warning had been a sign of rain, earlier this month troubles poured on the airline again. The
Department of Transportation
figures showing that less than half of all United Airlines flights arrived on time in July, making it the worst on-time performer among the nation's major carriers for the third month in a row. And the airlines predicted more cancellations.
"I think the market or the Street has largely discounted the second half of the year because of the summer," said Robert Milmore, analyst for
Arnhold & S. Bleichroeder
. While the loss comes as little surprise, analysts will now focus their concerns on the terms of UAL's deal with its pilots, he said, wondering aloud: "Did they raise the bar for everyone?" He rates the stock neutral, and his firm has not done underwriting for UAL.
The airline is also in contract negotiations with its groundworkers' union. United's contract expired in mid-July with its 44,000 union ground workers -- including the airline's mechanics, ramp workers, reservation and ticket agents and baggage personnel.
The airline has blamed labor disruptions for the forced cancellation of thousands of flights. In August, United acknowledged that it would cancel 1,980 flights in September and an additional 1,940 flights in October, in addition to the 4,800 flights removed from its summer schedule after union pilots began refusing to fly overtime when their contract expired. Early this month, they agreed to a tentative contract.