Illinois-based air carrier UAL Corp. (UAUA) Tuesday reported a substantial loss for the second-quarter on non-cash impairment charges and a 54.1% increase in fuel costs. Revenues for the quarter, however, increased 3% from last year. The company revealed plans to reduce its capacity and slash workforce by seven thousand people by 2009 end.
Net loss for the second quarter was $2.73 billion or $21.47 per share compared to a profit of $274 million or $1.83 per share in the year-ago quarter. On average, ten analysts polled by First Call/Thomson Financial expected the company to post a loss of $2.05 per share for the quarter.
Results for the quarter included a non-cash goodwill impairment charge of $2.3 billion, non-cash charges of $194 million relating to the impairment of aircraft, and severance charges of $82 million related to staff-reductions. Excluding the special items, second-quarter net loss was $151 million or $1.19 per share.
Higher fuel cost has dragged all of the company's peers, including Continental Airlines Inc. (CAL), AMR Corp. (AMR), and Delta Air Lines Inc. (DAL) to a loss in their respective second quarters.
Total operating revenues for the second quarter advanced 3% to $5.37 billion from $5.21 billion in the prior-year quarter, down from the Street's expectation of $5.39 billion. Passenger revenue from UAL's primary subsidiary, United Airlines, increased 3.3% to $4.10 billion, while passenger revenue from regional affiliates dropped 0.9% to $797 million. Total cargo revenue for the quarter climbed 30.9% to $237 million from the comparable quarter of 2007.
Second quarter loss from operations was $2.69 million compared to income from operations of $537 million in the second quarter of 2007. Operating loss, excluding the special accounting charges, was $87 million.
Total operating expenses for the quarter, including $2.28 billion charges related to impairment of goodwill, surged to $8.07 billion from $4.68 billion in the last-year quarter. Air fuel expenses for the quarter climbed to $1.85 billion from $1.21 billion in the same quarter a year earlier.
Glenn Tilton, United president, commented, "Our industry is challenged as never before by the unrelenting price of oil, and United is taking aggressive action to offset unprecedented fuel costs and to strengthen the competitiveness of our business."
On July 16, analyst Gary Chase of Lehman Brothers maintained his 'overweight' rating on UAL, while reducing the target price to $11.50 from $14.50. In a research note, the analyst indicated that the airline industry would resolve the issues of a soft global economy and high energy costs in the near future. The consensus expectations for the airline sector are likely to be reduced significantly going forward, in view of the substantially increased fuel guidance, the analyst said.
Net loss for the six-month period was $3.27 billion or $26.33 per share compared to a profit of $122 million or $0.88 per share in the corresponding period last year. Year-to-date, operating revenues increased 5.2% to $10.08 billion.
The company also said it plans to reduce its workforce by more than 7 thousand people in order to curtail costs and improve liquidity. The job-cuts include reduction of 1,500 salaried and management workforce and 5,500 frontline workers by the end of 2009.
Further, United revealed its initiatives to offset the impact of rising fuel prices in future quarters. The company said it will remove 94 narrowbody aircraft and six widebody aircraft from its operations, while retiring the entire fleet of Boeing B737 aircraft as part of rightsizing the business.
Looking ahead to the third quarter and the full year, United continues to expect mainline cost per available seat miles, or CASM, excluding fuel, special items and the largely non-cash accounting charges, to increase between 1.5% and 2.5%.
UAUA is currently trading at $7.20, up $2.21 or 44.29%, on a volume of about 34.37 million shares. The stock has been moving in a range of $2.80 to $51.60 for the past one year, with a three-month average volume of about 9.94 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.