But In The Wacky World Of Business, That's Not ALL Bad...

UAL Corp., parent company for United Airlines, reported a record $1.77 billion loss Monday for the third quarter of FY2005. Most of those losses stem from the heavy toll reworking its airplane contracts and leases has taken on the beleaguered carrier, including creditor's claims on its aircraft following the company's rejection of leases and contracts in an attempt to secure lower prices.

However, things may not be as dire as that number might make it seem: while the latest loss puts United's overall losses from nearly three years of bankruptcy protection at $9 billion, the carrier also posted a $165 million operating profit for the quarter. Take away that $1.8 billion in restructuring costs, said the carrier, and UAL would have posted a net profit of $68 million.

United executives point to the figure as a sign the carrier is on target to emerge from Chapter 11 early next year, according to the Associated Press.

"We have largely completed United's restructuring work and we are on schedule to emerge from Chapter 11 in early February as we have announced," CEO Glenn Tilton told employees in a recorded message.

That may be the case, but it's also difficult to overlook it was the company's 21st consecutive quarter in the red. The loss also topped the previous record of $1.47 billion for Q4 of 2002, when the carrier first filed for bankruptcy protection.

The company is also optimistic claims against the company, which are still being settled, will ultimately result in the carrier only having to pay a fraction of the original amounts. Once those claims are settled, United CFO Jake Brace said, the company expects to report a large on-paper gain offsetting those losses.

"This is very normal for bankruptcies ... (and) has nothing to do with the operation of the business at all," Brace said. "The industry still has a number of challenges, fuel costs chief among them, but we're pleased with our results."

Many financial analysts echo those sentiments, saying despite mounting losses the carrier is performing well. Several lenders have also endorsed United's progress, and stuck with the company through its losses. As Aero-News reported last month, JPMorgan Chase Bank and Citigroup Inc. are the lead financiers on a $3 billion debt package that United signed off on Oct. 6, ensuring its successful emergence from bankruptcy.

"That's just so many financial barnacles to stick onto a bankrupt company," said airline consultant and Boyd Group president Michael Boyd. "They're going to get scraped off."

"It's a good performance, frankly," Boyd continued.  "I think it clearly shows going forward that they can pull this off."

While the carrier is forecasting a true profit next year for the first time in five years, the goal is based on a business plan envisioning the cost of fuel to remain close to $50 per barrel -- which is $10 below current prices. United said it spent $405 million more on fuel this year, compared to Q3 of 2004.

FMI: www.united.com