Star Alliance carrier United Airlines has reported a net loss of $2.7 billion for the second quarter, including heavy one-off accounting charges related to goodwill impairment and increased fuels costs, as well as plans for 5,500 frontline employee job cuts over the next 18 months.
The loss figure includes $2.6 billion in accounting charges, predominantly covering a $2.3 billion non-cash special charge for goodwill impairment.
Excluding these one-off charges, United made an operating loss of $87 million for the three months ending June 2008. This compares to an operating profit of $537 million for the same period last year. Net losses excluding these charges totalled $151 million in the second quarter, a deterioration of $425 million on the same period last year.
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Total revenues increased 3% during the second quarter to $5.37 billion. Its costs however spiralled to just over $8 billion on the accounting charges and increased fuels costs – around $773 million higher. It could not rule out further accounting charges in future quarters.
In line with its previously announced heavy capacity cuts, United had already outlined around 1,500 job cuts to its salaried and management employees. Today it has today detailed the scope of cuts to its frontline staff. “The company now expects to reduce its frontline workforce by more than 5,500 employees by the end of 2009. United is working to reduce the impact of capacity reductions on employees through voluntary programmes,” it says.
United president, chairman and CEO Glenn Tilton says: “Our industry is challenged as never before by the unrelenting price of oil, and United is taking aggressive action to offset unprecedented fuel costs and to strengthen the competitiveness of our business.
“The elimination of our entire Boeing 737 fleet and our alliance with Continental are examples of the different approach we are taking to respond to dramatically changed market conditions to deliver better results for all our stakeholders.”
Source: Air Transport Intelligence news
Source: Flight International
