United reports heavy 2012 loses

United Airlines parent United Continental Holdings (UCH) incurred a 2012 net loss of $763 million on heavy interest expenses and merger-related costs.

The net deficit was improved over a $977 net loss in 2011. The company was profitable on an operating basis, posting $39 million in operating income, but that was down 97.9% year-over-year. “2012 was the toughest year of our merger integration” with the former Continental Airlines, UCH chairman, president and CEO Jeff Smisek told analysts and reporters.

The carrier’s six Boeing 787s remain grounded after FAA’s emergency directive last week, but Smisek said the airline continues “to have confidence” in the aircraft and expects to take delivery of two more 787s this year. He added that neither Boeing nor FAA has provided guidance on when the grounding may be lifted.

“The aircraft is a terrific aircraft … and I have no doubt customers will flock back to it once we get it back up in the air,” Smisek said. “Once this particular issue is solved, it’s solved. It’s just a matter of how much time it takes.”

He conceded United suffered from a poor operational and revenue performance in 2012, but said it has turned the corner and expects more reliable operations in 2013. He added United has achieved an 84% on-time domestic arrival rate so far in 2013; the carrier sunk to a below-80% on-time performance in the middle part of 2012. “We are significantly better today than we were last summer,” he said.

UCH will reduce its management and administrative staff by 6% starting next month, Smisek said, noting the move is necessary because the company is “absolutely not satisfied” with last year’s performance. The staff will be reduced by around 600 employees.

United plans to cut capacity 0.5% year-over-year in 2013 in response to what it expects to be sluggish global economic growth.

The company’s 2012 revenue was flat year-over-year at $37.15 billion while expenses rose 5.2% to 37.11 billion. Mainline traffic decreased 1.3% to 179.42 billion RPMs on a 1.4% cut in capacity to 216.33 billion ASMs. Load factor was down 0.1 point to 82.9%. Passenger yield increased just 0.6% to 14.38 cents.

(Aaron Karp - ATWOnline News)