United Airlines parent UAL ( UALAQ) sharply widened its quarterly loss, as the war in Iraq hurt consumer air travel and raised fuel costs.

The Elk Grove Village, Ill.-based company, which filed for bankruptcy in December, reported a loss of $1.3 billion, or $14.16 a share, compared with a loss of $510 million, or $9.22 a share, in the year-earlier period. Special items included $248 million in reorganization items and $137 million related to the writedown of the company's investment in and guarantee of debt for Air Canada.

Nonetheless, shares of the company were up 6% at $1.27 Friday in morning trading.

Excluding items, the company lost $10.11 a share, compared with a loss of $8.81 in the comparable period. Analysts expected the company to lose $12.08 a share, on average.

"The first quarter was particularly difficult, given travelers' concerns about the conflict in Iraq, the weak economy and a fierce low-fare environment," said Glenn Tilton, chief executive. United also said it reduced capacity for April and May, and that April capacity is expected to be down 14% on the year, while May will be down 20%.

Revenue was $3.18 billion, down from last year's $3.29 billion. Passenger revenue for the quarter was down 8% from last year.

The company said it ended the quarter with $1.6 billion in cash.

UAL said its future quarterly results will reflect lower salary and benefit costs, as well as the added flexibility and productivity enhancements associated with its new wage and work-rule agreements. These new agreements, which went into affect Thursday, along with capacity reductions, are expected to reduce second-quarter 2003 salaried and related costs by $400 million to $500 million over second-quarter 2002, the company said.

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