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United Loses $609 Million in 1Q; Fares Don't Cover Costs

United Airlines Reports Quarterly Profit Of 140 Million
Justin Sullivan/Getty Images
By SCOTT MAYEROWITZ

United Airlines is the one U.S. carrier that can't seem to get its act together.

While all the other major airlines made money in the first quarter, United lost $609 million during the first three months of this year.

United attributed $200 million of its loss to the "historic severe" winter weather that impacted much of the U.S. this past winter. But by comparison, Delta Air Lines (DAL) made $213 million in the same quarter while dealing with the same ice and snow storms.

Chicago-based United (UAL) is still struggling to combine systems and see financial benefits following its 2010 merger with Continental Airlines. In the first quarter, its cost for each mile passengers flew rose 1 percent but its related revenue fell 2 percent. It simply isn't able to charge high enough airfares.

United lost $1.66 a share, worse than the $1.26 a share it lost during the same period last year. Excluding special items, the loss was $1.33 a share, barely beating the $1.35 loss expected by Wall Street analysts surveyed by FactSet.

United's revenue slipped 0.3 percent to $8.7 billion, just short of the $8.71 billion Wall Street analysts had expected.

The one bright spot for United was that it paid less for fuel: $3.18 a gallon, down from $3.28 during last year's first quarter. Considering that the airline used 916 million gallons during the period, that added up to $133 million in savings.

"While we are not pleased with our first-quarter financial results, we are building a strong foundation that will result in improved financial performance," John Rainey, chief financial officer for United Continental Holdings, Inc., said in a statement.

United also lost $21 million during the quarter due to an exchange rate loss in Venezuela. Approximately $100 million of the company's unrestricted cash balance was held as Venezuelan bolivars as of March 31, 2014. All international airlines flying there have struggled with a quickly devaluing currency and have billions of dollars tied up in bolivars that can't be quickly converted because of Venezuelan currency controls.

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a5323344444444

United has infuriated labor, implemented dated technology, lost massive corporate accounts, and failed to fully merge the airline. When will United's BOD wake up realize United employees and investors are flying into last place because of CEO Smisek. United desperately need a new CEO that can get the airline flying high again. Smisek needs to jettisoned.

April 25 2014 at 1:37 AM Report abuse rate up rate down Reply
rafaelsnj

It is funny , Delta has lowest prices and still made money , United prices were on average 20% higher this winter and they lost money ? No wonder United service is terrible since their merge , I miss Continental , now I would rather change plane in ATL than fly non stop from EWR on United.
Beware of United crews if they say they are from Chicago it means thay are ex United and they going to be rude and unpleseant

April 24 2014 at 10:37 AM Report abuse -1 rate up rate down Reply
1 reply to rafaelsnj's comment
IFLYMAUI

United Airlines crews were/are superior to Continental crews as their training in both safety and customer service well exceeded that of other major carriers. Especially multi-bankrupt Continental/Eastern along with its management and CEO Jeff Smisek. The new United/Continental continues to outsource its airport services to third party venues costing and triggering sub-par customer service ratings.

April 24 2014 at 12:31 PM Report abuse rate up rate down Reply