UAL sees business and premium travel improving, as 4Q loss narrows from a year earlier

UAL 4Q loss shrinks; business travel picking up

MINNEAPOLIS — United Airlines said business travel is improving, echoing comments from rivals Delta and American, and its fourth-quarter loss was much smaller than a year ago.

UAL Corp., which runs the nation’s third-largest airline, lost $240 million during the fourth quarter. That’s much smaller than the $1.32 billion loss during the same period last year. Not counting fuel hedges and special items, it lost $1.05 per share. Analysts surveyed by Thomson Reuters expected it to lose $1.47 per share.

“With business and premium traffic strengthening and the benefit of an improved cost structure, we are well on the road to closing the profitability gap,” Chief Financial Officer Kathryn Mikells said in a prepared statement on Wednesday.

An improvement in business travel is one of the key things analysts have been watching for as a sign that United’s prospects are getting brighter. The layout of its routes means that United suffered more than other airlines when business travel dropped — and it should stand to gain as business travel returns.

Revenue fell 7.8 percent to $4.19 billion.

“On an operating basis, we were break-even, which is a significant accomplishment in what is seasonally one of our weakest quarters,” Mikells said.

Fourth-quarter fuel expenses fell $459 million, or 28 percent, from a year ago, as United cut capacity and the price per gallon dropped. Amid worries that fuel prices will rise again, United has hedged 70 percent of its first quarter fuel at the equivalent of $75 per barrel of oil. For the full year, 40 percent of its fuel is capped at $77 per barrel.

United said it will make about $60 million in aircraft deposits during the first quarter for the big jet order it announced late last year.

The company ended the quarter with $3.04 billion in cash — a billion more than the same time last year. It raised money aggressively in 2009, mortgaging airplanes and parts and offering stock. It has cut more than $700 million from its debt and lease payments over the next two years.

“We have taken any near term liquidity concerns off the table and now enjoy a greater degree of financial flexibility,” Mikells wrote in an update for employees on Wednesday.

However, there isn’t much more to mortgage. Once the most recent transactions wrap up, UAL will have about $200 million in assets that aren’t pledged on loans.

UAL shares rose 2 cents to $12.81 in morning trading.