United Airlines Parent Loses $537 Million, Cuts 1,100 Jobs

[marmar]

from AP, via HuffPost:





United Airlines Parent Loses $537 Million, Cuts 1,100 Jobs
DAVE CARPENTER | April 22, 2008 01:21 PM EST |



CHICAGO — United Airlines parent UAL Corp. lost about a third of its market value Tuesday after reporting a $537 million first-quarter loss due to soaring fuel costs and saying it is cutting flights and 1,100 jobs.

The sell-off accelerated and shares of other airlines dropped after Delta Air Lines Inc. CEO Richard Anderson said in Washington that in the face of record fuel prices domestic carriers would need to raise fares by 15 percent to 20 percent just to break even. At the same time, crude oil prices jumped by more than $2 and neared the once-unimaginable $120-a-barrel mark.

Anderson said higher fares would likely diminish demand for air travel, and prompt carriers to further reduce their schedules.

UAL's loss, in what it called an "extraordinarily difficult" environment for airlines, was the biggest since the nation's second-largest carrier emerged from bankruptcy in 2006 and worse than Wall Street expected. Shares in the company plummeted 35 percent to $13.88 in afternoon trading.

Chicago-based UAL said its nearly 8 percent growth in revenue from the first quarter of 2007 was more than offset by a $618 million jump in fuel costs, which rose nearly 50 percent in a year.

The carrier follows American Airlines parent AMR Corp. and Continental Airlines Inc. into the red for the quarter because of fuel costs. Southwest Airlines Co. is the only large carrier to have reported a profit so far. Delta and Northwest report first-quarter results on Wednesday, while US Airways Group Inc. reports Thursday.

Among smaller carriers, JetBlue Airways Corp. reported an $8 million loss Tuesday that was narrower than expected, as slower growth helped the discount airline keep a lid on its costs despite skyrocketing fuel prices.

High oil prices and the global credit squeeze are also affecting demand for new planes. While airlines can still negotiate substantial discounts, European planemaker Airbus said Tuesday that the ever-weaker dollar and high metals prices are forcing it to raise prices. Airbus announced increases of as much as 3 percent to catalog prices _ on top of the 2.74 percent annual hike for 2007 already programmed. ......(more)

The complete piece is at: http://www.huffingtonpost.com/2008/04/22/united-airlines-parent-lo_n_98009.html