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| UAL Corporation Reports Fourth Quarter 2008 Results |
|
CONTINUING AGGRESSIVE ACTIONS TO POSITION COMPANY FOR SUCCESS IN 2009
* Reported a fourth quarter pre-tax loss of
The company reported a pre-tax loss, excluding non-cash, net mark-to-
market hedge losses and certain accounting charges, of Fuel prices drove the company's losses in 2008. The historic peak in
prices and the impact on hedges driven by the rapid decline resulted in a "Last year was by any measure a challenging year - defined by
unprecedented volatility and unpredictability, but for United it was also
characterized by steady and durable improvements," said Capacity Actions Drove Improved Passenger Unit Revenue Results Total passenger revenue for the quarter decreased 8.7 percent year-over- year as consolidated capacity declined 10.6 percent, consolidated yield increased 2.4 percent and load factor decreased 0.3 points. Domestic mainline PRASM for the fourth quarter, excluding Mileage Plus accounting impacts, was up 6.7 percent year-over-year, reflecting the company's capacity reduction actions. Including Mileage Plus accounting impacts, the company's domestic mainline PRASM was up 4.6 percent for the quarter. International mainline PRASM, excluding Mileage Plus accounting impacts, was up 1.2 percent for the quarter as a result of weaker demand for international travel. Including Mileage Plus accounting impacts, the company's international PRASM declined 1.7 percent. Regional Affiliate PRASM for the quarter, excluding Mileage Plus accounting impacts, was up 1.8 percent year-over-year. Including the Mileage Plus accounting impacts, regional affiliate PRASM declined 0.7 percent for the quarter. Cargo revenue for the quarter decreased 19.3 percent year-over-year as a result of lower international capacity and weakening demand.
Passenger Adjusted
4Q 2008 Revenue PRASM(1) PRASM ASM(2)
Passenger % % % %
Geographic Revenue Increase/ Increase/ Increase/ Increase/
Area (millions) (Decrease) (Decrease) (Decrease) (Decrease)
Domestic $1,989 (10.5%) 6.7% 4.6% (14.4%)
Pacific 700 (16.4%) 0.8% (2.1%) (14.7%)
Atlantic 597 (0.6%) (0.2%) (3.0%) 2.4%
Latin America 127 (7.1%) 3.7% 0.8% (7.9%)
Total
Mainline $3,413 (10.1%) 4.4% 1.8% (11.7%)
Regional
Affiliates 752 (1.7%) 1.8% (0.7%) (1.0%)
Total
Consolidated $4,165 (8.7%) 4.7% 2.1% (10.6%)
(1) PRASM adjusted for Mileage Plus effects (See Note 5 to the attached
statements of consolidated operations).
(2) ASM (available seat miles)
Continued Focus on Cost Performance Mainline CASM, excluding fuel and certain accounting charges, was up only 1.6 percent in the fourth quarter, despite an 11.7 percent decline in mainline capacity as the company took aggressive action to remove fixed as well as variable costs from the system while reducing capacity. For the full-year 2008, mainline CASM excluding fuel and certain accounting charges was up only 1.5 percent, despite a 4.2 percent decline in capacity.
Fourth Quarter Increase/(Decrease)
Mainline Consolidated
% %
2008 2007 Chg. 2008 2007 Chg.
CASM (cents) 14.97 12.39 20.8% 15.39 13.08 17.7%
CASM excluding
certain accounting
charges and non-cash,
net mark-to-market
losses (cents) 12.91 12.41 4.0% 13.57 13.10 3.6%
CASM excluding fuel
and certain
accounting charges
(cents) 8.41 8.28 1.6% 8.87 8.72 1.7%
"Our industry continues to be challenged by a volatile fuel and revenue
environment, and against that backdrop, we are delivering strong cost results
even as we reduce capacity and improve quality," said Lower Fuel Prices Resulted in Hedging Losses The company recorded
Three Months Ending Dec. 31, 2008
(in millions)
Included Included in
In Fuel Non-Operating
Expense Expense Total
Non-cash, net mark-to-market
loss $(449) $(117) $(566)
Cash net loss on settled
contracts (142) (228) (370)
Total recorded net losses $(591) $(345) $(936)
Action Taken to Enhance Cash Position The company completed several transactions during the fourth quarter that
helped strengthen its liquidity. It raised During the quarter, the company entered into an amendment with its largest
credit card processor that suspends until During the fourth quarter, the company generated negative The company ended the quarter with an unrestricted cash balance of Early in the first quarter of 2009 the company closed an additional
aircraft financing transaction, which raised "United, like many airlines across the industry, experienced significant
cash pressures associated with fuel hedge positions in 2008 as oil prices
declined more than Income Taxes Because of its net operating loss carry-forwards, the company expects to pay minimal cash taxes for the foreseeable future and is not recording incremental tax benefits at this time. Significant Improvements in Operating Results United has seen significant improvement in its operational performance
during the fourth quarter as a result of its increased focus on operational
execution, improvements in the schedule structure and the industry-wide
reduction in capacity. The company has also benefited from the November
opening of the new runway at United's on-time arrival :14 performance for the fourth quarter was 79.2
percent, the company's best fourth quarter performance since 2004. Its
cancellation rate was 1.4 percent, which is the company's lowest fourth
quarter rate since 2005. As a result of these improvements, United ranked
second in on-time performance for the fourth quarter among the five major U.S.
network carriers, including
Business Highlights
* United began new daily non-stop passenger and cargo service between
2009 Outlook United is on track to complete the previously announced removal of 100 aircraft from its fleet by the end of 2009. The company's capacity outlook for the first quarter 2009 and full-year 2009 is shown below:
Capacity First Quarter Full-year
(Available Seat Miles) 2009* 2009*
Domestic -14.0% to -13.0% -12.5% to -11.5%
International -15.0% to -14.0% -6.0% to -5.0%
Mainline -14.5% to -13.5% -9.5% to -8.5%
Express +4.0% to +5.0% +8.0% to +9.0%
Consolidated Domestic -11.0% to -10.0% -9.0% to -8.0%
Consolidated -12.5% to -11.5% -8.0% to -7.0%
* Increase/(Decrease) versus 2008
For the first quarter 2009, the company anticipates mainline CASM, excluding fuel, profit sharing and certain accounting charges, to increase between 4.0 and 5.0 percent despite a mainline capacity reduction of 14 percent. Consolidated CASM, excluding fuel, profit sharing and certain accounting charges, is also expected to increase between 4.0 and 5.0 percent. Continuing to build on its mainline non-fuel CASM results from 2008, the company anticipates full-year 2009 mainline CASM, excluding fuel, profit sharing and certain accounting charges, to increase between 2.5 and 3.5 percent despite a 9 percent reduction in mainline capacity. Consolidated CASM, excluding fuel, profit sharing and certain accounting charges, is also expected to increase between 2.5 and 3.5 percent. United is taking additional steps in 2009 to reduce overhead costs. The company will further reduce the number of salaried and management employees by approximately 1,000 positions by the end of 2009. This is in addition to the 1,500 positions the company announced in the second quarter, and when completed, will bring the total reduction in its salaried and management staff to approximately 2,500, or nearly 30 percent, since the beginning of 2008. The company is also limiting its non-aircraft capital budget to Since the company's The company estimates the following fuel prices for the first quarter
based on the closing forward curve on
Three Months Ending
Mainline Fuel Price (Price per Gallon)(1)
In addition to the impact of fuel hedges on fuel expense, a portion of the
company's total fuel hedge impact is recorded as a non-operating expense. The
company estimates that The company estimates it will have the following amounts posted as fuel hedge collateral at each quarter end:
Projected Fuel Hedge Collateral Balance at Each Quarter End
Jan. 19,
2009 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Based on
Additional details can be found in note 10 of the attached statement of consolidated operations. About United *Based on United's flight schedule between Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: Certain statements included in this press release are forward-
looking and thus reflect the company's current expectations and beliefs with
respect to certain current and future events and financial performance. Such
forward-looking statements are and will be subject to many risks and
uncertainties relating to the operations and business environment of the
company that may cause actual results to differ materially from any future
results expressed or implied in such forward-looking statements. Factors that
could significantly affect net earnings, revenues, expenses, costs, load
factor and capacity include, without limitation, the following: the company's
ability to comply with the terms of its credit facility; the costs and
availability of financing; the company's ability to execute its business plan;
the company's ability to realize benefits from its resource optimization
efforts and cost reduction initiatives; the company's ability to attract,
motivate and/or retain key employees; the company's ability to attract and
retain customers; demand for transportation in the markets in which the
company operates; general economic conditions (including interest rates,
foreign currency exchange rates, investment or credit market conditions, crude
oil prices and energy refining capacity in relevant markets); the effects of
any hostilities or act of war or any terrorist attack; the ability of other
air carriers with whom the company has alliances or partnerships to provide
the services contemplated by the respective arrangements with such carriers;
the costs and availability of aircraft insurance; the costs of jet fuel; our
ability to cost-effectively hedge against increases in the price of jet fuel;
any potential realized or unrealized gains or losses related to fuel or
currency hedging programs; the costs associated with security measures and
practices; labor costs; industry consolidation; competitive pressures on
pricing and on demand; capacity decisions of United and/or its competitors;
U.S. or foreign governmental legislation, regulation and other actions,
including the effect of open skies agreements; the company's ability to
utilize its net operating losses; the ability of the company to maintain
satisfactory labor relations and our ability to avoid any disruptions to
operations due to any potential actions by our labor groups; weather
conditions; and other risks and uncertainties set forth from time to time in
UAL's reports to the UAL CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
Three Months Ended %
December 31, Increase/
(In accordance with GAAP) 2008 2007 (Decrease)
Operating revenues: Passenger - United Airlines $3,413 $3,797 (10.1)
Passenger - Regional Affiliates 752 765 (1.7)
Cargo 180 223 (19.3)
Other operating revenues 202 245 (17.6)
4,547 5,030 (9.6)
Operating expenses: Aircraft fuel (Notes 3 and 5) 1,838 1,432 28.4
Salaries and related costs (Note 5) 1,049 1,112 (5.7)
Regional affiliates (a) 740 765 (3.3)
Purchased services 328 366 (10.4)
Depreciation and amortization (Note 5) 262 231 13.4
Aircraft maintenance materials and
outside repairs 228 306 (25.5)
Landing fees and other rent 211 222 (5.0)
Distribution expenses 152 183 (16.9)
Other impairments and special items (Note 5) 125 - -
Aircraft rent 95 99 (4.0)
Cost of third party sales 68 78 (12.8)
Other operating expenses (Note 5) 263 300 (12.3)
5,359 5,094 5.2
Loss from operations (812) (64) NM
Other income (expense):
Interest expense (131) (155) (15.5)
Interest income 12 66 (81.8)
Interest capitalized 4 5 (20.0)
Gain on sale of investment - 41 (100.0)
Miscellaneous, net (Note 5) (373) 9 -
(488) (34) NM
Loss before income taxes and equity in
earnings of affiliates (1,300) (98) NM
Income tax expense (benefit) (Note 5) 5 (43) -
Loss before equity in earnings of
affiliates (1,305) (55) NM
Equity in earnings of affiliates, net
of tax 2 2 -
Net loss $(1,303) $(53) NM
Loss per share, basic and diluted $(9.91) $(0.47)
Weighted average shares, basic and
diluted 131.6 117.7
See accompanying notes. (a) Regional affiliates expense includes regional aircraft rent expense. See Note 2 for more information. NM Not meaningful.
UAL CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
Twelve Months Ended %
December 31, Increase/
(In accordance with GAAP) 2008 2007 (Decrease)
Operating revenues: Passenger - United Airlines $15,337 $15,254 0.5
Passenger - Regional Affiliates 3,098 3,063 1.1
Cargo 854 770 10.9
Special operating items (Note 5) - 45 (100.0)
Other operating revenues 905 1,011 (10.5)
20,194 20,143 0.3
Operating expenses: Aircraft fuel (Notes 3 and 5) 7,722 5,003 54.3
Salaries and related costs (Note 5) 4,311 4,261 1.2
Regional affiliates (a) 3,248 2,941 10.4
Purchased services (Note 5) 1,375 1,346 2.2
Aircraft maintenance materials
and outside repairs 1,096 1,166 (6.0)
Depreciation and amortization
(Note 5) 932 925 0.8
Landing fees and other rent 862 876 (1.6)
Distribution expenses 710 779 (8.9)
Aircraft rent 409 406 0.7
Cost of third party sales 272 316 (13.9)
Goodwill impairment (Note 5) 2,277 - -
Other impairments and special
items (Note 5) 339 (44) -
Other operating expenses (Note 5) 1,079 1,131 (4.6)
24,632 19,106 28.9
Earnings (loss) from operations (4,438) 1,037 -
Other income (expense): Interest expense (523) (661) (20.9)
Interest income 112 257 (56.4)
Interest capitalized 20 19 5.3
Gain on sale of investment - 41 (100.0)
Miscellaneous, net (Note 5) (550) 2 -
(941) (342) 175.1
Earnings (loss) before income taxes
and equity in earnings of affiliates (5,379) 695 -
Income tax expense (benefit) (Note 5) (25) 297 -
Earnings (loss) before equity in
earnings of affiliates (5,354) 398 -
Equity in earnings of affiliates, net
of tax 6 5 20.0
Net income (loss) $(5,348) $403 -
Earnings (loss) per share, basic $(42.21) Earnings (loss) per share, diluted $(42.21)
Weighted average shares, basic 126.8 117.4
Weighted average shares, diluted 126.8 153.7
See accompanying notes. (a) Regional affiliates expense includes regional aircraft rent expense. See Note 2 for more information. NM Not meaningful.
UAL CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In millions)
Three Months Twelve Months
Ended % Ended %
December 31, Increase/ December 31, Increase/
(In accordance with GAAP) 2008 2007 (Decrease) 2008 2007 (Decrease)
Cash flows provided (used) by operating
activities (a) $(989) $132 - $(1,239) $2,134 -
Cash flows provided (used) by investing activities: Net (purchases) sales of short-term
investments - 604 (100.0) 2,295 (1,983) -
Additions to property
and equipment (80) (230) (65.2) (415) (658) (36.9)
Proceeds from the sale
of investment - 128 (100.0) - 128 (100.0)
Purchases of EETC
securities - (20) (100.0) - (96) (100.0)
(Increase) decrease in restricted cash (b) (24) 32 - 484 91 431.9 Proceeds from asset
sale leaseback 215 - - 274 - -
Proceeds from litigation on advance
deposits - - - 41 - -
Proceeds from the sale of property and
equipment 51 5 NM 94 19 394.7
Other, net (17) (22) (22.7) (52) (61) (14.8)
145 497 (70.8) 2,721 (2,560) -
Cash flows provided
(used) by financing
activities:
Repayment of Credit
Facility - (500) (100.0) (18) (1,495) (98.8)
Repayment of other debt (128) (108) 18.5 (666) (1,257) (47.0) Special distribution - - - (253) - - Principal payments under capital leases (26) (117) (77.8) (235) (177) 32.8 Decrease in capital
lease deposits 1 80 (98.8) 155 80 93.8
Increase (decrease) in deferred financing
costs (2) 4 - (120) (18) NM
Proceeds from issuance
of secured notes - - - 337 694 (51.4)
Proceeds from the sale
of stock 107 - - 107 - -
Other, net - 8 (100.0) (9) 26 -
(48) (633) (92.4) (702) (2,147) (67.3)
Increase (decrease) in cash and cash equivalents during the
period (892) (4) NM 780 (2,573) -
Cash and cash equivalents at beginning of the
period 2,931 1,263 132.1 1,259 3,832 (67.1)
Cash and cash equivalents at end of the period Reconciliation of cash and cash equivalents to total cash and cash equivalents, short-term investments and restricted cash:
As of %
December 31, Increase/
2008 2007 (Decrease)
Cash and cash equivalents $2,039 $1,259 62.0
Short-term investments - 2,295 (100.0)
Restricted cash (b) 272 756 (64.0)
Total cash and cash equivalents, short-term investments and
restricted cash (b) $2,311 $4,310 (46.4)
(a) See Note 5[h] for the Company's computation of free cash flow. (b) Restricted cash decreased significantly during the year ended
NM Not meaningful. CONSOLIDATED NOTES (UNAUDITED) (1) principal subsidiary is (2) United has contractual relationships with various regional carriers to provide regional jet and turboprop service branded as United Express.
Under these agreements, United pays the regional carriers
contractually agreed fees for crew expenses, maintenance expenses and
other costs of operating these flights. These costs include aircraft
rents of
(3) UAL's results of operations include aircraft fuel expense for both United mainline jet operations and regional affiliates. Aircraft fuel
expense incurred as a result of the Company's regional affiliates'
operations is reflected in Regional affiliates operating expense. In
accordance with UAL's agreement with its regional affiliates, these
costs are incurred by the Company. Fuel hedging gains or losses are
not allocated to Regional affiliates fuel expense.
Year-Over-Year Impact of Fuel Expense
United Mainline and Regional Affiliate Operations
(In millions, Three Months Ended Twelve Months Ended except per gallon) December 31, % December 31, %
2008 2007 Change 2008 2007 Change
Total Mainline fuel
expense $1,838 $1,432 28.4 $7,722 $5,003 54.3
Non-cash, net mark-
to-market gains
(losses) in mainline
fuel (449) 7 - (568) 20 -
Mainline fuel expense
excluding non-cash,
net mark-to-market
gains (losses) 1,389 1,439 (3.5) 7,154 5,023 42.4
Regional affiliates
fuel expense 247 262 (5.7) 1,257 915 37.4
United system fuel
expense excluding
non-cash, net mark-
to-market gains
(losses) $1,636 $1,701 (3.8) $8,411 $5,938 41.6
Mainline fuel
consumption
(gallons) 491 566 (13.3) 2,182 2,292 (4.8)
Mainline average jet
fuel price per
gallon (in cents) 374.3 253.0 47.9 353.9 218.3 62.1
Mainline average jet
fuel price per
gallon excluding
non-cash, net mark-
to-market gains
(losses) (in cents) 282.9 254.2 11.3 327.9 219.2 49.6
Regional affiliates
fuel consumption
(gallons) 92 93 (1.1) 371 377 (1.6)
Regional affiliates
average jet fuel
price per gallon (in
cents) 268.5 281.7 (4.7) 338.8 242.7 39.6
(4) The tables below set forth certain operating statistics by geographic region and the Company's mainline, regional affiliates and consolidated operations, excluding special revenue items and the impact of Mileage Plus: (% change from prior year)
Three Months Ended Regional
December 31, 2008 Affili- Consoli-
Domestic Pacific Atlantic Latin Mainline ates dated
Passenger
revenues (8.6) (13.9) 2.3 (4.5) (7.9) 0.8 (6.4)
ASM (14.4) (14.7) 2.4 (7.9) (11.7) (1.0) (10.6)
RPM (12.6) (17.6) (1.3) (14.6) (12.1) (0.3) (10.9)
PRASM 6.7 0.8 (0.2) 3.7 4.4 1.8 4.7
Yield [a] 4.4 5.2 2.8 9.8 4.8 1.1 5.1
Load factor
(points) 1.7 (2.7) (3.0) (5.6) (0.3) 0.6 (0.3)
Twelve Months Ended Regional
December 31, 2008 Affili- Consoli-
Domestic Pacific Atlantic Latin Mainline ates dated
Passenger
revenues (0.8) (1.7) 12.3 7.2 1.3 1.9 1.4
ASM (7.8) (4.8) 11.0 (2.8) (4.2) (0.8) (3.9)
RPM (8.5) (9.4) 7.9 (5.5) (6.3) (3.9) (6.0)
PRASM 7.6 3.2 1.2 10.3 5.8 2.8 5.5
Yield [a] 8.3 8.5 3.4 14.1 8.0 6.1 7.9
Load factor
(points) (0.6) (3.9) (2.3) (2.2) (1.7) (2.4) (1.8)
[a] Yields for geographic regions exclude charter revenue, industry
reduced fares, passenger charges and related revenue passenger
miles.
CONSOLIDATED NOTES (UNAUDITED)
(5) The Company incurred significant charges related to tangible and intangible asset impairments, severance and other charges that significantly impacted its results in the three and twelve months ended "impairments and other charges" in the Regulation G reconciliations
below. These items consist of the following:
Three Twelve
Months Months
Ended Ended
December 31, December 31,
2008 2008
Income
Statement
Classification
Goodwill impairment $- $2,277 Goodwill
impairment
Intangible asset impairments - 64
Aircraft and deposit impairments 107 250
Other impairments 107 314
Lease termination and special items 18 25 Total other impairments and special 125 339 Other items impairments
and special
items
Severance 18 106 Salaries and
related costs
Employee benefit charges 29 57 (a) Salaries and
related costs
Litigation-related settlement gain - (29) Other operating
expenses
Purchased services charges - 26 (b) Purchased
services
Net gain on asset sales (11) (3) Depreciation
and
amortization
Accelerated depreciation related to 26 34 Depreciation aircraft groundings and
amortization
Total other charges 62 191
Total impairments, special items and 187 2,807 other charges
Operating non-cash, net mark-to- 449 568 Aircraft fuel
market losses
Total operating expense impact 636 3,375
Non-operating non-cash, mark-to- 117 279 Miscellaneous,
market losses net
Pre-tax impairments and other 753 3,654
charges
Income tax expense (benefit) on (5) (31) Income tax
intangible asset impairments and expense
asset sales (benefit)
Impairments and other charges, net $748 $3,623
of tax
(a) Amount relates to additional charges to adjust certain employee benefit obligations. (b) Amount relates to expense for certain projects and transactions that have been terminated or indefinitely postponed by the Company.
The Company did not classify any items as special items during the
fourth quarter of 2007, but it did have special items for the year
ended
[h] Operating cash flow (In
millions)
Operating
cash flow $(989) $132 - $(1,239) $2,134 -
Less: capital
expenditures (80) (230) (65.2) (415) (658) (36.9)
Add: proceeds
from
litigation on
advance
deposits - - - 41 - -
Free cash
flow $(1,069) $(98) NM $(1,613) $1,476 -
[i] Loss per
share (Basic
and diluted)
Loss per
share -
GAAP $(9.91) $(42.21)
Add: non-
cash, net
mark-to-
market
losses 4.30 6.68
Add:
impairments,
special
items and
other
charges 1.39 21.90
Loss per
share -
excluding non-
cash, net mark-
to-market
losses and
impairments,
special items
and other
charges $(4.22) $(13.63)
(i) For the three and twelve months ended
(6) The table below sets forth the estimated exit-related and fresh-start reporting impacts on the Company's results of operations.
2008 Increase (Decrease)
(In millions)
Revenue impact: 1Q 2Q 3Q 4Q YTD
Estimate Estimate Estimate Estimate Estimate
Mileage Plus
revenue $(65) $(42) $(12) $(48) $(167)[a]
Operating expense
impact:
Share-based
compensation 11 7 5 8 31 [b]
Mileage Plus
marketing expense 5 2 6 3 16 [a]
Postretirement welfare
cost 14 14 14 14 56 [c]
Depreciation and
amortization 10 10 10 10 40 [d]
Deferred gain 18 18 18 18 72 [e]
Total operating
expense impact 58 51 53 53 215
Non-operating expense
impact:
Non-cash and fresh-
start interest
expense $4 $4 $4 $5 $17 [f]
[a] In connection with its emergence from Chapter 11 protection effective
[b] In accordance with the plan of reorganization, the Company implemented stock-based compensation plans for certain management employees and non-employee directors. The Company adopted SFAS 123R effective [c] In accordance with fresh-start reporting, the Company revalued its liabilities effective all prior period service credits related to postretirement costs were eliminated. [d] In accordance with fresh-start reporting, the Company revalued its assets to fair value effective [e] In accordance with fresh-start reporting, the Company revalued its liabilities effective all deferred gains on aircraft sale/leasebacks were eliminated. [f] As a result of fresh-start reporting, the Company recognizes certain non-cash interest expenses, including the amortization of mark-to-
market discounts on all debt and capital leases.
(7) The following table presents additional detail on the Mileage Plus impacts summarized in the table above. These items consist of the
additional amount of revenue that the Company estimates would have
been recognized had we continued to apply the incremental cost method
of accounting after exiting bankruptcy and, for 2007, the estimated
impact of the change in the expiration period for inactive accounts
from 36 months to 18 months. The Company utilizes this adjustment for
comparison of its performance to its peers, as certain of our peers
currently still apply the incremental cost method of accounting.
Increase (Decrease)
2008
(In millions) 1Q 2Q 3Q 4Q YTD
Mainline
Effect of accounting change $(54) $(35) $(11) $(39) $(139)
Effect of expiration period change - - - - -
Total Mainline (54) (35) (11) (39) (139)
Regional Affiliates
Effect of accounting change (11) (7) (1) (9) (28)
Effect of expiration period change - - - - -
Total Regional Affiliates (11) (7) (1) (9) (28)
Consolidated
Effect of accounting change (65) (42) (12) (48) (167)
Effect of expiration period change - - - - -
Total Consolidated $(65) $(42) $(12) $(48) $(167)
Increase (Decrease)
2007
(In millions) 1Q 2Q 3Q 4Q YTD
Mainline
Effect of accounting change $(113) $(37) $(30) $(50) $(230)
Effect of expiration period change 23 39 42 100 204
Total Mainline (90) 2 12 50 (26)
Regional Affiliates
Effect of accounting change (22) (9) (5) (11) (47)
Effect of expiration period change 5 8 8 21 42
Total Regional Affiliates (17) (1) 3 10 (5)
Consolidated
Effect of accounting change (135) (46) (35) (61) (277)
Effect of expiration period change 28 47 50 121 246
Total Consolidated $(107) $1 $15 $60 $(31)
CONSOLIDATED NOTES (UNAUDITED)
(8) Pursuant to SEC Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable
financial measures reported on a GAAP basis. Further, the Company
believes that excluding fuel costs from certain measures is useful to
investors because it provides an additional measure of management's
performance excluding the effects of a significant cost item over
which management has limited influence. The Company also believes
that adjusting for impairments and other charges is useful to
investors because they are non-recurring income and/or charges that
are not indicative of the Company's on-going performance.
The forecasted fuel amounts shown below were estimated based on
forecasted jet fuel prices, including estimated hedge impacts, of
(i) CASM also excludes the impact of future special items and other charges, including profit sharing, as these items are unknown and
cannot be predicted with certainty.
(9) The table below details the Company's hedge positions as of January 16, 2009.
Average Price
% of Expected % of Expected Where Payment
Consolidated Mainline Obligations
Hedging Instrument Consumption(i) Consumption(i) Stop
1st Quarter 2009
Calls 18% 21% N/A
Collars 9% (10%) 11% (12%) N/A
3-Way Collars 25% (29%) 30% (35%) N/A
4-Way Collars 2% 2% $63 bbl
1st Quarter 2009 Total 54% 64% N/A
1st Quarter 2009 Purchased Puts to Cap Downside
Purchased Puts 35% 42% $57
Full Year 2009
Calls 12% 14% N/A
Collars 5% (6%) 6% (7%) N/A
3-Way Collars 18% (22%) 22% (26%) N/A
4-Way Collars 1% 2% $63 bbl
Full Year 2009 Total 36% 44% N/A
Full Year 2009 Purchased Puts to Cap Downside
Purchased Puts 17% 20% $54
Average Price Average Price Average Price
Where Payment Where Where
Obligations Protection Protection
Hedging Instrument Begin Begins Ends
1st Quarter 2009
Calls N/A $77 bbl(ii) N/A
Collars $109 bbl $118 bbl N/A
3-Way Collars $104 bbl $118 bbl $143 bbl
4-Way Collars $78 bbl $95 bbl $135 bbl
1st Quarter 2009 Total $104 bbl $104 bbl N/A
1st Quarter 2009 Purchased Puts to Cap Downside
Purchased Puts
Full Year 2009
Calls N/A $76 bbl(iii) N/A
Collars $111 bbl $123 bbl N/A
3-Way Collars $102 bbl $117 bbl $147 bbl
4-Way Collars $78 bbl $95 bbl $135 bbl
Full Year 2009 Total $103 bbl $104 bbl N/A
Full Year 2009 Purchased Puts to Cap Downside Purchased Puts (i) Percent of expected mainline and consolidated consumption represents the notional amount of purchased calls in the hedge structures.
Certain 3-way collars and collars included in the table above have
sold puts with twice the notional amount of the purchased calls.
The percent in parentheses represent the notional amount of sold
puts in these hedge structures.
(ii) Call position average includes the following two groupings of positions: 9% of consolidated consumption with protection beginning at (iii) Call position average includes the following two groupings of positions: 5% of consolidated consumption with protection beginning
at
(10) The table below outlines the Company's estimated collateral provisions at various crude oil prices, based on the hedge portfolio
as of
For example, using the table above, at an illustrative Company's derivative counterparties would be approximately
UAL CORPORATION AND SUBSIDIARY COMPANIES
(Mainline and Regional Affiliates (a))
Three Months Ended
December 31, %
2008 2007 Change
Mainline revenue passengers (In thousands) 14,147 16,042 (11.8)
Revenue passenger miles - RPM (In
millions)
Mainline 24,517 27,890 (12.1)
Regional affiliates 3,003 3,013 (0.3)
Consolidated 27,520 30,903 (10.9)
Available seat miles - ASM (In millions)
Mainline 30,857 34,949 (11.7)
Regional affiliates 3,959 3,999 (1.0)
Consolidated 34,816 38,948 (10.6)
Passenger load factor (percent)
Mainline 79.5 79.8 (0.3) pt.
Regional affiliates 75.9 75.3 0.6 pt.
Consolidated 79.0 79.3 (0.3) pt.
Consolidated operating breakeven
passenger load factor (percent) 94.5 80.5 14.0 pt.
Passenger revenue per passenger mile - Yield (cents) [See Note 5a]
Mainline adjusted 13.88 13.57 2.3
Mainline adjusted for Mileage Plus 14.04 13.40 4.8
Regional affiliates 25.04 25.39 (1.4)
Regional affiliates adjusted for
Mileage Plus 25.34 25.06 1.1
Consolidated adjusted 15.09 14.73 2.4
Consolidated adjusted for Mileage
Plus 15.27 14.53 5.1
Passenger revenue per available seat mile - PRASM (cents) [See Note 5b]
Mainline 11.06 10.86 1.8
Mainline adjusted for Mileage Plus 11.19 10.72 4.4
Regional affiliates 18.99 19.13 (0.7)
Regional affiliates adjusted for
Mileage Plus 19.22 18.88 1.8
Consolidated 11.96 11.71 2.1
Consolidated adjusted for Mileage
Plus 12.10 11.56 4.7
Operating revenue per available seat mile - RASM (cents) [See Note 5c]
Mainline 12.30 12.20 0.8
Mainline adjusted for Mileage Plus 12.43 12.06 3.1
Regional affiliates 18.99 19.13 (0.7)
Regional affiliates adjusted for
Mileage Plus 19.22 18.88 1.8
Consolidated 13.06 12.91 1.2
Consolidated adjusted for Mileage
Plus 13.20 12.76 3.4
Operating expense per available seat mile - CASM (cents) [See Note 5g]
Mainline 14.97 12.39 20.8
Mainline excluding impairments, special items, other charges and non-cash, net mark-to-market (gains)
losses 12.91 12.41 4.0
Mainline excluding impairments, other
special items, fuel & UAFC 8.41 8.28 1.6
Regional affiliates 18.69 19.13 (2.3)
Consolidated 15.39 13.08 17.7
Consolidated excluding
impairments, special items,
other charges and non-cash,
net mark-to-market (gains)
losses 13.57 13.10 3.6
Consolidated excluding
impairments, other special
items, fuel & UAFC 8.87 8.72 1.7
Mainline unit earnings (loss)
(cents) (b) (2.67) (0.19) NM
Mainline unit earnings excluding impairments, special items and other charges (including non-cash, net mark-to-market (gains) losses), fuel
& UAFC (cents) (b) 3.89 3.92 (0.8)
Number of aircraft in operating fleet at end of period
Mainline 409 460 (11.1)
Regional affiliates 280 279 0.4
Consolidated 689 739 (6.8)
Other Mainline Statistics Mainline average price per gallon of
jet fuel (cents) 374.3 253.0 47.9
Mainline average price per gallon of jet fuel excluding non-cash, net mark-to-market (gains) losses
(cents) 282.9 254.2 11.3
Average full-time equivalent
employees (thousands) 45.9 51.7 (11.2)
Mainline ASMs per equivalent employee
- productivity (thousands) 672 676 (0.6)
Average stage length (in miles) 1,400 1,381 1.4
Fleet utilization (in hours and
minutes) 10:05 10:42 (5.8)
(a) Mainline includes operations. Regional affiliates include operations from regional carriers with whom the Company has entered into capacity purchase agreements to provide jet and turboprop operations branded as United Express. (b) Unit earnings are calculated as RASM minus CASM. NM - Not meaningful
UAL CORPORATION AND SUBSIDIARY COMPANIES
(Mainline and Regional Affiliates (a))
Twelve Months Ended
December 31, %
2008 2007 Change
Mainline revenue passengers (In thousands) 63,149 68,386 (7.7)
Revenue passenger miles - RPM (In
millions)
Mainline 110,061 117,399 (6.3)
Regional affiliates 12,155 12,649 (3.9)
Consolidated 122,216 130,048 (6.0)
Available seat miles - ASM (In millions)
Mainline 135,861 141,890 (4.2)
Regional affiliates 16,164 16,301 (0.8)
Consolidated 152,025 158,191 (3.9)
Passenger load factor (percent)
Mainline 81.0 82.7 (1.7) pt.
Regional affiliates 75.2 77.6 (2.4) pt.
Consolidated 80.4 82.2 (1.8) pt.
Consolidated operating breakeven
passenger load factor (percent) 99.8 77.6 22.2 pt.
Passenger revenue per passenger mile - Yield (cents) [See Note 5a]
Mainline adjusted 13.89 12.99 6.9
Mainline adjusted for special items 13.89 12.95 7.3 Mainline adjusted for special items
and Mileage Plus 14.02 12.98 8.0
Regional affiliates 25.49 24.28 5.0
Regional affiliates adjusted for
special items 25.49 24.22 5.2
Regional affiliates adjusted for special items and Mileage Plus 25.72 24.25 6.1
Consolidated adjusted 15.05 14.08 6.9
Consolidated adjusted for special
items 15.05 14.05 7.1
Consolidated adjusted for special
items and Mileage Plus 15.18 14.07 7.9
Passenger revenue per available seat mile - PRASM (cents) [See Note 5b]
Mainline 11.29 10.78 4.7
Mainline adjusted for special items 11.29 10.75 5.0 Mainline adjusted for special items
and Mileage Plus 11.39 10.77 5.8
Regional affiliates 19.17 18.84 1.8
Regional affiliates adjusted for
special items 19.17 18.79 2.0
Regional affiliates adjusted for special items and Mileage Plus 19.34 18.82 2.8
Consolidated 12.13 11.61 4.5
Consolidated adjusted for special
items 12.13 11.58 4.7
Consolidated adjusted for special
items and Mileage Plus 12.24 11.60 5.5
Operating revenue per available seat mile - RASM (cents) [See Note 5c]
Mainline 12.58 12.03 4.6
Mainline adjusted for special items 12.58 12.01 4.7 Mainline adjusted for special items
and Mileage Plus 12.69 12.02 5.6
Regional affiliates 19.17 18.84 1.8
Regional affiliates adjusted for
special items 19.17 18.79 2.0
Regional affiliates adjusted for special items and Mileage Plus 19.34 18.82 2.8
Consolidated 13.28 12.73 4.3
Consolidated adjusted for special
items 13.28 12.70 4.6
Consolidated adjusted for special
items and Mileage Plus 13.39 12.72 5.3
Operating expense per available seat mile - CASM (cents) [See Note 5g]
Mainline 15.74 11.39 38.2
Mainline excluding impairments, special items, other charges and non-cash, net mark-to-market (gains)
losses 13.26 11.44 15.9
Mainline excluding impairments, other
special items, fuel & UAFC 7.99 7.87 1.5
Regional affiliates 20.09 18.04 11.4
Consolidated 16.20 12.08 34.1
Consolidated excluding
impairments, special items,
other charges and non-cash,
net mark-to-market (gains)
losses and other special items 13.98 12.12 15.3
Consolidated excluding
impairments, other special
items, fuel & UAFC 8.45 8.34 1.3
Mainline unit earnings (loss)
(cents) (b) (3.16) 0.64 -
Mainline unit earnings excluding special revenue items, impairments, special items and other charges (including non-cash, net mark-to- market (gains) losses), fuel & UAFC
(cents) (b) 4.59 4.14 10.9
Number of aircraft in operating fleet at end of period
Mainline 409 460 (11.1)
Regional affiliates 280 279 0.4
Consolidated 689 739 (6.8)
Other Mainline Statistics Mainline average price per gallon of
jet fuel (cents) 353.9 218.3 62.1
Mainline average price per gallon of jet fuel excluding non-cash, net mark-to-market (gains) losses
(cents) 327.9 219.2 49.6
Average full-time equivalent
employees (thousands) 49.6 51.6 (3.9)
Mainline ASMs per equivalent employee
- productivity (thousands) 2,739 2,750 (0.4)
Average stage length (in miles) 1,402 1,371 2.3
Fleet utilization (in hours and
minutes) 10:42 11:00 (2.7)
(a) Mainline includes operations. Regional affiliates include operations from regional carriers with whom the Company has entered into capacity purchase agreements to provide jet and turboprop operations branded as United Express. (b) Unit earnings are calculated as RASM minus CASM. NM - Not meaningful
SOURCE |
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