Rounding out a disappointing earnings week for the nation’s largest airlines, UAL Corp. on Friday reported a $510 million first-quarter loss because of continued fallout from the terrorist attacks of Sept. 11.
At the same time, the parent company of United Airlines said it hopes to meet next week with representatives of the airline’s six labor unions to begin wage-concession talks.
“It is in our collective interest to get our costs in line with our revenues,” said Jake Brace, senior vice president and chief financial officer. “The labor rates were set in a different time and different revenue environment.”
While cost controls and capacity cutbacks are reducing the rate at which United burns through its cash reserves, Brace said the company still is spending $5 million more per day than it is taking in. And he warned that the company will not earn a profit in the second quarter or for the year.
Brace said UAL’s first-quarter loss of $510 million, or $9.22 a share, compared with a loss of $313 million, or $5.97 a share, in the year-earlier period. That was significantly better than the $10.24 a share that Wall Street analysts estimated UAL would lose, according to a survey by Thomson Financial/First Call. Revenue for the quarter fell 26 percent, to $3.29 billion from $4.42 billion.
Much of United’s improvement occurred in March, when revenue was off only 9 percent compared with a year ago.
Other airlines have said the early Easter holiday helped boost their March revenues, although they, too, continue to lose money. Collectively, the industry lost $2.4 billion in the first quarter.
Brace said United continues to weigh whether to file for a government-guaranteed loan. Only America West Airlines has received a loan from the $10 billion fund, which was created as part of the $15 billion bailout of the airline industry. Two other carriers, Spirit and Vanguard, have filed loan applications, and US Airways said Thursday that it was “likely” that it would do so.
“We view that situation as part of our overall financial recovery plan,” Brace said. “We would clearly not like to access the government guarantee, but we are considering it as part of our overall plan.”
Some labor leaders suggested that talk about the government-guaranteed loan program is being used by United for leverage in the coming wage talks.
The Air Transportation Stabilization Board, which authorizes the loans, has indicated in the past that concessions could be a key issue in whether an airline receives the guaranteed loan.
Frank Larkin, a spokesman for the International Association of Machinists, which represents more than half of the airline’s employees, won’t be attending next week’s meeting with United Chief Executive Jack Creighton.
“No IAM representative will take part in any such meeting until all IAM members at United have ratified agreements in place,” said Larkin, referring to District 141 workers who are still attempting to negotiate a contract.
United is to resume bargaining on Monday with the union, which represents the 30,000 ramp, gate, reservation and customer contact workers. The two sides have been bargaining for 2 1/2 years.
United’s pilots union said any wage talks must be linked to a recovery plan.
“There has got to be some kind of plan of how they plan to get from Point A to Point B,” said Capt. Steve Derebey, a spokesman for the United unit of the Air Line Pilots Association.
Shares of UAL closed Friday at $15, up 16 cents a share on the New York Stock Exchange.
In other earnings news:
– Tribune Co. reported a first-quarter net loss because of a hefty accounting charge, but underlying profits surpassed analyst expectations.
The Chicago-based media company also said it had agreed to pay $125 million to acquire two Indiana TV stations from Sinclair Broadcast Group Inc.
In the latest quarter, Tribune reported a net loss of $101.6 million, or 33 cents a diluted share, compared with net income of $70.6 million, or 20 cents a share, a year earlier.
Revenue slipped 4.6 percent, to $1.23 billion from $1.29 billion, reflecting the weaker advertising environment that continues to squeeze media companies’ profits.
Tribune’s bottom line was affected in the most recent quarter by a one-time after-tax charge of $165.6 million, or 51 cents a diluted share, relating to new accounting standards for acquisition-related goodwill.
Excluding the accounting charge and other non-operating items, Tribune’s earnings were 32 cents a share, up from 19 cents a share a year earlier.
Those results topped the First Call analyst consensus of 29 cents per share; Tribune executives also said they expect second-quarter and full-year results to be at the upper end of the range of analyst estimates.
In NYSE trading Friday, Tribune shares reached their highest level since January 2000, trading as high as $47.25 before ending with a gain of $1.87, or 4.1 percent, at $46.95.
Separately, Tribune announced the acquisitions of WTTV-TV in Indianapolis and its satellite station, WTTK-TV in Kokomo, funding the deal with the proceeds from the sale of Denver radio assets to Entercom Communications Corp. Tribune already owns WXIN-TV in Indianapolis among its 23 television stations.
– International Paper Co. reported first-quarter net income of $65 million, or 13 cents per share, and said the company is well-positioned to take advantage of an economic rebound.
A year earlier, the Stamford, Conn.-based paper giant had a net loss of $44 million, or 9 cents per share.
Excluding one-time charges, IP reported profit of $58 million, or 12 cents a share, in the latest quarter, easily topping analyst expectations of 7 cents per share. Revenue fell 13 percent, to $6 billion.
IP shares added 84 cents, or 2 percent, to $42.17.
– Profit rose sharply at BellSouth Corp. in the first quarter because of a one-time gain from a stock sale, but the telecommunications giant again cut its 2002 earnings outlook on the prospect of continued weak sales.
Atlanta-based BellSouth, the nation’s third-largest regional Bell company, said it earned $1.15 billion, or 61 cents per share, up from $891 million, or 47 cents a share, a year earlier.
Excluding investment gains–and several one-time charges–BellSouth earned $1.01 billion, or 54 cents a share, below analyst expectations of 56 cents per share.
BellSouth shares fell more than 4 percent, or $1.33, to $31.37 on the NYSE.
