United Announces First-Quarter 2014 Results

United Airlines (UAL) today reported a first-quarter 2014 net loss of $489 million, or $1.33 per share, excluding $120 million of special items. Including special items, UAL reported a

first-quarter 2014 net loss of $609 million, or $1.66 per share.

• Historic severe weather increased United’s first-quarter loss by approximately $200 million.
• United’s consolidated passenger revenue per available seat mile (PRASM) decreased 2.0 percent in the first quarter of 2014 compared to the first quarter of 2013. Weather-related cancellations reduced first-quarter 2014 consolidated PRASM by approximately 1.5 percentage points.
• First-quarter 2014 consolidated unit costs (CASM) increased 1.0 percent year-over-year. First-quarter 2014 consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 3.1 percent year-over-year on a consolidated capacity reduction of 0.3 percent.
• UAL ended the first quarter with $6.0 billion in unrestricted liquidity.

“This quarter’s financial performance is well below what we can and should achieve. We are taking the appropriate steps with our operations, network, service and product to deliver significantly better financial results,” said Jeff Smisek, UAL’s chairman, president and chief executive officer. “The entire United team is sharply focused on accomplishing the goals we have laid out for long-term financial success.”

First-Quarter Revenue and Capacity

For the first quarter of 2014, total revenue was $8.7 billion, a decrease of 0.3 percent year-over-year. First-quarter consolidated passenger revenue decreased 2.3 percent to $7.4 billion, compared to the same period in 2013. Ancillary revenue per passenger in the first quarter increased 7.6 percent year-over-year to more than $21 per passenger. First-quarter cargo revenue decreased 7.9 percent versus the first quarter of 2013 to $209 million. Other revenue in the first quarter increased 18.0 percent year-over-year to $1.1 billion, in large part due to an agreement to sell jet fuel to a third party.

Consolidated revenue passenger miles and consolidated available seat miles each decreased 0.3 percent year-over-year for the first quarter, driven largely by adverse weather, resulting in a first-quarter consolidated load factor of 81.1 percent.

First-quarter 2014 consolidated PRASM and consolidated yield each decreased 2.0 percent compared to the first quarter of 2013.

“We recognize that we have lagged on revenue and are taking the necessary actions to remedy that,” said Jim Compton, UAL’s vice chairman and chief revenue officer. “Our employees pulled together during the unprecedented extreme winter weather that marked this quarter. We appreciate their hard work, which resulted in higher customer satisfaction scores than for the same period last year.”

Passenger revenue for the first quarter of 2014 and period-to-period comparisons of related statistics for UAL’s mainline and regional operations are as follows:

				1Q 2014 Passenger Revenue   (millions)			Passenger Revenue vs. 1Q 2013		PRASM  vs. 1Q 2013		Yield vs. 1Q 2013		Available Seat Miles vs. 1Q 2013
Domestic				$2,916			0.2%		1.4%		0.3%		(1.0%)
Atlantic				1,163			(1.9%)		(3.4%)		0.4%		1.5%
Pacific				1,086			(5.0%)		(6.3%)		(4.0%)		1.4%
Latin America				683			(2.6%)		(1.7%)		(3.6%)		(0.9%)
International				2,932			(3.2%)		(4.1%)		(2.2%)		0.9%
Mainline				5,848			(1.5%)		(1.5%)		(1.0%)		0.0%
Regional				1,536			(5.2%)		(3.5%)		(6.0%)		(1.8%)
Consolidated				$7,384			(2.3%)		(2.0%)		(2.0%)		(0.3%)

First-Quarter Costs

Total operating expenses increased $60 million, or 0.7 percent, in the first quarter versus the same period in 2013. Excluding special charges, first-quarter total operating expenses increased $100 million, or 1.1 percent, year-over-year.

First-quarter consolidated CASM increased 1.0 percent year-over-year. First-quarter consolidated CASM, excluding special charges, third-party business expense, fuel and profit sharing, increased 3.1 percent compared to the first quarter of 2013. Third-party business expense was $193 million in the first quarter of 2014.

“We are making good progress in reducing costs and delivering sustainable efficiencies, all while improving the product for our customers,” said John Rainey, UAL’s executive vice president and chief financial officer. “While we are not pleased with our first-quarter financial results, we are building a strong foundation that will result in improved financial performance.”

Liquidity and Cash Flow

UAL ended the first quarter with $6.0 billion in unrestricted liquidity, including $1.0 billion of undrawn commitments under a revolving credit facility. The company generated $694 million of operating cash flow in the first quarter. During the first quarter, the company had gross capital expenditures of $737 million, excluding fully reimbursable projects. The company made debt and capital lease principal payments of $637 million in the first quarter.

First-Quarter 2014 Accomplishments

Operations, Employees and Customer Service

• United Airlines reported a first-quarter mainline on-time arrival rate (domestic and international) of 74.3 percent, adversely affected by unusually bad winter storms during the quarter that impacted many of the airline’s hubs. The on-time arrival rate is based on flights arriving within 14 minutes of scheduled arrival time.
• United paid employees $190 million in profit sharing for 2013 performance.
• Building on the success of last year’s training, the company launched its second wave of customer service training geared toward delivering on United’s flyer-friendly brand promise.

Finance, Network and Fleet

• The company pre-paid $400 million of 8 percent unsecured notes due 2024 and reduced its convertible debt balance by $202 million in the first quarter.
• United priced $949 million of enhanced equipment trust certificates at a blended interest rate of 4.13 percent, a record low interest rate for financings of this type. The proceeds are being used to finance the acquisition of 13Boeing 737-900ERs, nine Embraer 175s, two 787-8 Dreamliners and one 787-9 Dreamliner.
• The company took delivery of two new Boeing 787-8 Dreamliners in the first quarter, bringing its total Dreamliner fleet to 10 aircraft, and its first Embraer 175, the newest addition to the United Express fleet. United also took delivery of 10 new Boeing 737-900ERs and exited from scheduled service three 757-200s during the first quarter.
• United operated the first commercial flight worldwide with the new, fuel-efficient Split Scimitar winglets. Once the Split Scimitar installation is complete, winglet technology on United’s 737, 757 and 767 fleet is expected to save the airline more than 65 million gallons of fuel a year, equivalent to over $200 million per year in jet fuel costs at today’s prices.
• United continued installing slimmer, next-generation economy class seats on certain aircraft. The airline now offers these seats, which are 10 to 15 percent lighter than the seats they are replacing, on approximately 200 aircraft and expects to complete installation on approximately 350 aircraft by the end of 2014.
• United expanded its industry-leading global route network, launching nonstop flights from San Francisco toTaipei, Taiwan. The company also announced new nonstop international flights beginning later this year to Aruba;Santiago, Dominican Republic; and Nassau, Bahamas; and the airline’s first scheduled international route using the new 787-9 Dreamliner from Los Angeles to Melbourne, Australia. The airline started five new domestic routes in the first quarter, including United’s first service to Elmira, N.Y. and Topeka, Kan., and it also announced 10 new domestic markets including the company’s first service to Bangor, Maine; Devil’s Lake, N.D.; Jamestown, N.D.; and St. Cloud, Minn.

Flyer-Friendly Product, Loyalty Program and Facilities

• The company and its partners at San Francisco International Airport opened the newly renovated Boarding Area E in Terminal 3, a 10-gate, 68,800-square-foot boarding area.
• United opened a new Global Services reception lobby for its top frequent flyers at the airline’s New York hub atNewark Liberty International Airport. The company also completed construction on a new widebody aircraft maintenance hangar at Newark, expanding its maintenance capability for widebody aircraft at the airport by 33 percent. The company continued outfitting aircraft with satellite Wi-Fi across its mainline fleet. The airline now offers Wi-Fi on more than 230 aircraft and expects to have more than 450 Wi-Fi equipped aircraft by the end of 2014.
• United announced that it is rolling out a new personal device entertainment system onboard mainline aircraft later this year. With the new service, customers can choose from more than 150 movies and nearly 200 TV shows and watch them on their personal devices.
• United together with global distribution system (GDS) Travelport announced that Travelport-connected agents in the U.S. can now sell United Economy Plus extra-legroom seating. Travelport is the first GDS to re-launch the capability for travel agents to sell Economy Plus.
• The airline expanded its Mercedes-Benz tarmac transportation service, originally offered in Chicago and Houston, to its hubs at Newark Liberty and San Francisco.
• United debuted new electronics charging stations at its Chicago O’Hare hub. The airline is installing nearly 500 electronics charging stations in customer seating areas at airports nationwide.
• The airline added new menu items including gluten-free options for premium-cabin and United Economy customers. In addition, the company expanded for sale its premium wine service in United Economy on flights between the United States and Europe.
• United and the PGA TOUR teamed up to offer members of MileagePlus special discounts and access to courses within the PGA TOUR’s TPC Network – a collection of more than 30 world-class golf destinations throughout North America. United is the official airline of the PGA TOUR.

Source:- United Airlines