United Airlines Sees Clearer Skies Ahead

UAL, the parent company of United Airlines, reported better than expected
results Tuesday on a mix of heightened fares and increased travel.


During the company’s conference call Chief Executive Glenn Tilton said he was encouraged by what he sees as “early signs” of growing demand from business fliers, according to TradeTheNews.com. Regarding industry mergers, Tilton, a proponent of the benefits of consolidation said “UAL is carefully considering its options.

Wall Street has been anxiously awaiting word on possible
merger and acquisition deals within the industry, particularly between United
and Continental Airlines, but management did not comment specifically on its talks with Continental during the conference call. On April 22 US Airways said merger talks with United had broken off. US Air also reported first-quarter results Tuesday, announcing that it narrowed its loss to $45 million, or 28 cents per share.

UAL posted a first-quarter loss of $82 million, or 49 cents per share, Tuesday, a
substantial improvement from the $382 million, or $2.64 per share, loss
reported in last year’s corresponding period and better than the loss of 72
cents per share Wall Street expected. Sales of $4.2 billion were in line with
expectations and up from $3.7 billion in the first quarter of 2009.

During the conference call the company said flight
cancellations related to the Icelandic volcanic ash cost United between $30
million and $35 million, though it has already been incorporated into the April

In a memo Tuesday Kathryn Mikells, UAL’s chief financial officer, told
employees that the sales rise is a direct reflection of the company’s efforts
to control its capacity, change its international aircraft configuration and
manage its inventory as well as its customer service, according to the
Associated Press.

The improvement experienced during the first quarter came as
UAL enjoyed a 19% year-over-year increase in consolidated passenger revenue per
available seat-mile for the first quarter. It also saw a 4.8% year-over-year
increase in consolidated unit cost per available seat-mile, for the quarter,
excluding fuel and certain accounting charges, against a reduction in
consolidated capacity of 3.3% year-over-year. United also announced that it
made agreements with both Boeing and Airbus to buy 25 Boeing 787
Dreamliner aircraft and 25 Airbus A350 XWB aircraft.

“We are pleased to report an operating profit in what
is traditionally a weak quarter for United compared to our peers, clearly
reflective of our commitment to drive systemic improvements that are delivering
results across the company,” said UAL’s chief executive. “We are
committed to margin leadership, having produced the best net margin of the five
major carriers this quarter, and are doing the work to put our company on the
path to sustained profitability.”