Americas : United posts huge 3Q loss on fuel and slowdown
Stung by nearly US$1 billion in higher jet fuel costs, United Airlines’ parent UAL has reported a third-quarter net loss of US$779 million. The airline said the loss was due to high fuel prices during the quarter and accounting charges related to markdowns in the value of some fuel hedging contracts after oil prices fell […]
November 1, 2008
The airline said the loss was due to high fuel prices during the quarter and accounting charges related to markdowns in the value of some fuel hedging contracts after oil prices fell sharply by the end of the period. Those non-cash charges were US$519 million.
Its net loss compared with a profit of US$334 million, in the third quarter last year.
Not including the special items, United lost US$252 million.
“Oil prices reached unprecedented levels during the last quarter,” said CEO Glenn Tilton. “Failing financial institutions and tight credit markets are affecting us all.”
Jet fuel cost United $946 million more in the third quarter than a year earlier, a nearly 65 per cent increase. Because United â€” like most carriers â€” has been cutting routes and flights to cut costs, its flying capacity shrank 3.6 per cent year-on-year in the third quarter. This quarter, United’s domestic and international flying capacity will be down at least 11.5 per cent yearon- year.
United has been hurt by economic softness in certain international regions where it flies. It is reducing flying capacity to mainland China and halting its Los Angeles-Hong Kong route. The nonstop route between Denver and London Heathrow will also be discontinued because of weak demand. However, United is launching service between Washington Dulles and Dubai next week and between Dulles and Moscow in March.