This Is Going To Leave A Mark
Corp., the parent organization of United Airlines posted a massive
loss for the first quarter, amounting to $1.3 billion. And yet...
UAL's stock is soarning on the news, with investors thinking (or
perhaps wishing) the worst is now over.
United, still in bankruptcy and surrounded about talk of
liquidation, blamed the huge loss on the echoes of the September
11, 2001, terror attacks, the war in Iraq and the SARS scare. UAL
also wrote off its $137 million dollar loss resulting from its
investment in Air Canada, helping the Canadian airline avoid a
The Worst Is Over?
In a financial report issued on Friday, UAL looked to the bright
side, saying bookings are finally starting to show improvement, and
the hard-fought labor concessions should kick in during Q2. "While
much work needs to be done, United has made substantial progress
putting its house in order," said United CEO Glenn Tilton.
So far, first-quarter losses posted by domestic airlines have
topped $3.5 billion. Yet, investors, clearly wanting to believe the
worst is over for United and rival American, which posted a $1.04
billion loss for Q1, are buying again. Some carriers saw
double-digit gains on Friday. Dan Kasper, an airline consultant for
LECG in Cambridge (MA), was quoted by the Associated Press Friday
as saying the Q1 results are "modestly encouraging" for United.
"They've still got a severe revenue problem, as do all major
airlines. But because of the war and the SARS outbreak, this
quarter could have been considerably worse," he said. "United has
taken a very, very big step in getting its costs problem under
control. Now they need a big uptick on revenue."