narrowed its net loss in the third quarter and said its restructuring plans are on track, with the bankrupt carrier posting a small profit on an operating basis.
The parent of United Airlines reported a third-quarter net loss of $367 million, or $3.47 a share, which is an improvement from a net loss of $889 million, or $15.57, a share in the year-ago period. Excluding charges, the carrier lost just $37 million, or 36 cents a share, in the third quarter. The charges were mostly related to refusal of aircraft deliveries.
Unlike the third quarters of 2001 and 2002, when every single major network carrier had steep losses, this year's third quarter has been a time of recovery.
unit American Airlines surprised Wall Street with a small profit, as did
, while carriers continue to pare down costs and control capacity. While the fourth quarter of 2003 and first quarter of 2004 are expected to be more challenging, some analysts think profits for select network carriers could come before 2005.
United said its third-quarter operating income came in at $19 million, up $665 million from year-ago levels. Excluding all charges, the company reported an operating profit of $90 million.
"As these results make clear, our restructuring is on track. We are making tremendous progress in reducing costs, improving revenue and building a strong, sustainable business for the future," said Glenn Tilton, UAL's chief executive, in a statement. "Although there is much work to be done, our year-over-year improvement reflects the hard work of all United's employees."
Indeed, United has done much to reduce costs and improve revenue while under Chapter 11 bankruptcy protection.
In the third quarter, the carrier posted revenue of $3.8 billion, up 2% over last year's quarter. Capacity, measured in available seat miles, fell 12% from 2002's quarter against a 6% fall in traffic, measured in revenue passenger miles. With supplies falling faster than demand, the carrier filled 80.2% of seats in the third quarter, up from 75.4% a year ago.
Meanwhile, operating expenses fell by a wide margin, thanks in no small part to layoffs, wage reductions and employee sacrifices. All in all, operating expenses came in at $3.8 billion, down 13% from last year, with cost per available seat mile down 9%. Salary cuts and other work rule changes drove the cost cutting, with that expense line item falling $630 million, or by 34%, from the year-ago quarter.
Going forward, United said pricing power was firm and that it would continue to constrain capacity. "Booked load factor and yield for the balance of the year are running ahead of last year. Capacity is expected to be down 8% compared to the fourth quarter of 2002," the company said.
United plans to emerge from bankruptcy at the end of March 2004.
On Thursday, shares of UAL, which trade only on the over-the-counter market and will likely be worthless when UAL emerges from bankruptcy, were unchanged at $1.06.