UAL posts smaller-than-expected loss
United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz) posted a quarterly loss due to July’s record-high energy prices and a drop in the value of its fuel hedges as oil later plummeted, but the results were not as bad as Wall Street expected, and the company’s shares rose more than 10 percent.
The loss underscores the troubles UAL and its rivals had last quarter as they grappled with skyrocketing fuel bills that peaked alongside crude oil in July.
The carrier suffered an additional noncash loss of $519 million, however, as its hedges — designed to blunt the impact of rising fuel — lost book value as oil began a rapid descent.
“While oil prices are lower in recent weeks, they continue to be volatile,” UAL Chief Executive Glenn Tilton said in an e-mail to employees.
“That said, the convergence of falling oil prices with our capacity flexibility, strong improvement on costs and competitive revenue put us in a position to make our margin and return United to profitability,” Tilton said faxless online payday advances.
Minus the noncash loss, the carrier’s results easily beat market expectations. UAL shares rose $1.30, or 10.3 percent, to $13.97 in morning Nasdaq trade.
The airline industry has been battered by soaring fuel costs, which peaked alongside crude oil as it notched a record high in July. Oil has fallen about 50 percent since it touched its high.
Nevertheless, airlines are rapidly downsizing to offset fuel bills. UAL, which intends to reduce its domestic capacity by 14 percent in the fourth quarter, is cutting 7,000 jobs from its workforce of 55,000.