NEW YORK (XFNews-ASIA) - UAL Corp said it recorded a loss for February and March in a shortened first quarter, as the parent of United Airlines emerged from Chapter 11 bankruptcy protection, but also reported a lopsided gain that colored the financial results.
A court-approved cash infusion from a restructuring plan boosted total net income in the three months ended March 31 to 22.63 bln usd, reversing a loss of 1.1 bln registered in the first three months of 2005.
UAL said that excluding reorganization charges, it would have posted a loss for the combined quarter of 306 mln usd, wider than its 302 mln loss a year earlier.
The shares fell about 7.5 pct in afternoon trade Monday to 36.07 usd as Prudential analysts downgraded the stock to underweight from overweight. "Given the unlikelihood that UAL could even reach a breakeven this year, a year when others are likely to have solid earnings, we are lowering our rating," according to the analysts' research note.
United said its results included 69 mln usd in stock options-based expensing for the reorganized company. Executives said a detailed accounting of charges and other items would be contained in a regulatory filing later Monday.
Revenue in the combined periods rose 14 pct, reaching to 4.47 bln usd from 3.92 bln.
The airline credited its restructured regional-carrier agreements and a 28 pct revenue gain for its affiliates as catalysts behind the top-line increase.
"The improved revenue environment essentially compensated for record high fuel expense," said Jake Brace, UAL's chief financial officer. The company, which does not have a fuel hedging program, said its system-wide fuel expense in the first three months of the year rose 33.1 pct to 1.26 bln usd.
Laying out some 2006 performance targets, UAL forecast growth rates in available seat miles of 2.5-3.0 pct on its mainline routes and 8-9 pct for its regional affiliates.
The carrier also said it plans 400 mln usd in cost savings, "over and above" what's in its business plan. UAL plans to restrain some international capacity and combine some cargo and airport operations.
Poor West Coast weather, record-high load factors and tighter turn times "put pressure on United's operational performance in the first quarter," the company said, ranking it sixth in on-time arrival performance and second in terms of least mishandled baggage among the six major network carriers.
The Amex Airline Index fell 1 pct to 51.59 points as the price of crude fell below 70 usd a barrel following comments from Iran that hinted at a moderating posture.