One Year After Emerging From Bankruptcy, United Has Turned a Profit

For all its progress, though, United could be headed toward new storm clouds. Worker groups will be looking for wage and benefit increases in coming years after taking massive cuts, which could boost labor costs significantly.


While some observers say United didn't slash costs enough, others think it went too far in areas such as staffing. Some also say United has diluted its brand - and confused customers - by offering various services under different names.

And although a merger or acquisition could make United the world's largest carrier, it also could create new headaches. Such moves, after all, have rarely been successful in the airline industry.

The real test likely will come in the next couple of years.

Another spike in oil prices, a sharp decrease in demand or an economic slowdown will reveal exactly how far United has come, observers say.

"They seem to have regained some equilibrium and stability," said Anthony Sabino, a law professor in the Tobin College of Business at St. John's University in New York. "But you'll only really start to see if United has in fact rehabilitated itself during the next economic downturn."

Carrier hits the numbers

* In the first 11 months since United emerged from bankruptcy:

Profit: $25 million

Cost cuts: $435 million

* 2006 compared with 2005:*

Operating revenue per available seat mile, excluding certain items: $12.28 vs. $11.24

Costs per available seat mile, excluding fuel and certain items: $7.92 vs. $8.08

On-time arrival 2006 (through November): 74.26 percent vs. 78.53.

Available seat miles: 158.8 billion vs. 154.7 billion

Load factor, which measures how full its planes are: 81.7 percent vs. 80.9 percent

* Fourth quarter 2006 compared with same period in 2005:

Revenue: $4.6 billion, up 2 percent

Employee productivity: Up 4 percent

Aircraft productivity: 11 hours a day, up from 10 hours and 44 minutes

Salaries and related expense: $1 billion, from $934 million

*United Was Still In Bankruptcy For One Month In 2006

How they've fared since United emerged from bankruptcy

* Workers

United's bankruptcy took a huge toll on employees, who were forced to take pay, benefit and pension cuts on top of mass layoffs and outsourcing. Workers, though, have benefited from the relative stability of their employer over the past year, and many received small pay increases built into their contracts. But most employees still make far less than they did a few years ago.

* Executives

United's executives have been rewarded handsomely - in the form of stock awards. The carrier's top eight executives received 1.6 million shares of restricted stock and 2.5 million stock options, only a fraction of which have vested to date.

$11.6 million: How much United's top seven executives have made by selling stock and options awarded after the carrier emerged from bankruptcy.

* Customers

Free and clear from the restraints of bankruptcy, United has devoted more time to bolstering customer service. After cutting back on service for years, United has been adding flights in Denver and elsewhere, upgrading its elite cabins on international flights and introducing advanced jet bridges that allow for faster boarding and deplaning.

69.2 million passengers flew on United Airlines in 2006, up 3.8 percent from a year earlier.

* Stockholders

United shareholders who bought or received stock after the carrier emerged from bankruptcy have been on a bumpy ride. After debuting last February at $41, United shares tumbled to about $22 by August. United's stock then marched upward, hitting a high in the low $50s on acquisition speculation. On Friday, the stock traded at $44.31, 8 percent higher than a year ago.

$44.31 Closing price of United shares on Friday, up $3.31 from the stock's debut a year ago.

69.2 million passengers flew on United Airlines in 2006, up 3.8 percent from a year earlier.

$11.6 million: How much United's top seven executives have made by selling stock and options awarded after the carrier emerged from bankruptcy.

51,700 United workers in the fourth quarter of 2006, down from 53,200 in 2005.



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