Bankrupt UAL, parent of United Airlines, reported a wider fourth-quarter net loss on Thursday, citing persistently high fuel costs and weak revenue.
UAL posted a net loss of USD$664 million compared with a loss of USD$476 million a year earlier.
"Record fuel prices and pressure on revenue led to unacceptable results," said United Chief Executive Glenn Tilton in a statement. "United has made good progress with more cost reductions already under way. But as we have said, and as this quarter shows without question, we have more work to do."
The carrier said fuel expenses rose 58 percent in the quarter, to USD$842 million.
Excluding special items, UAL's loss for the quarter was USD$553 million. Special items included a gain of USD$158 million from the sale of UAL's remaining shares of online travel agency Orbitz, USD$222 million in reorganization expenses, and a USD$47 million increase in frequent flyer liability.
Revenue was USD$4 billion, up from USD$3.8 billion a year earlier.
"Weak yields and high fuel prices are the key chief culprits," said Ray Neidl, airline analyst at Calyon Securities "It still needs a lot of work."
Neidl said the airline needs to step up its cost-cutting efforts, particularly its labor costs.
United, which has been in bankruptcy for more than two years, is seeking to cut costs and reorganize into a leaner operation. It is seeking USD$725 million in annual savings from its labor force.
Those cuts are on top of USD$2.5 billion in givebacks negotiated earlier with the same unions. United has reached tentative labor deals with five of its six unions and continues to negotiate pension issues.
Jake Brace, United's chief financial officer, said the carrier must terminate and replace all of its pension plans in order to exit Chapter 11.
Like most other big airlines, United has been battered by soaring fuel costs, low revenue and competition from low-cost carriers. Several major carriers reported heavy fourth-quarter losses, including Delta Air Lines, which lost USD$2.2 billion.
United said it expects the number of seats it puts up for sale to be down about 2 percent in the first quarter and down about 3 percent for all of 2005.
To achieve this capacity reduction, it said it would cut domestic capacity by about 12 percent while adding about 14 percent to international capacity. The carrier is beefing up its international presence, where there is less low-fare competition.
The average fuel price in the fourth quarter was USD$1.45 per gallon including taxes, up 52 percent from a year earlier, United said.
It projects fuel prices, including taxes and an expected hedge benefit, will average USD$1.41 per gallon in the first quarter. The company has 30 percent of its expected fuel consumption for the quarter hedged at an average of USD$1.38 per gallon including taxes.
