United Airlines' holding company reported a $698 million net loss Wednesday for the month of October, continuing to lose money as it nears the completion of a nearly three-year-old overhaul in bankruptcy.
UAL Corp. said the loss consisted mostly of $584 million in reorganization expenses that resulted largely from the termination of its pilots' defined-benefit pension plan. It blamed the rest of the deficit on a 53 percent rise in fuel prices from October 2004 that caused the company to spend $169 million more on fuel than it did a year earlier.
The operating loss for the month was $71 million, compared with $65 million in the same period of 2004.
UAL said costs for its mainline unit, excluding fuel, were down 4 percent while passenger revenue rose 9 percent.
The company has now reported net losses of $14.9 billion since last turning a profit in the second quarter of 2000, including $5 billion this year and $9.7 billion since it filed for Chapter 11 bankruptcy in December 2002.
But it suggested that the huge recent losses are somewhat misleading, since large non-cash reorganization expenses are common for companies closing in on emergence from bankruptcy. UAL noted that claims pending against it are expected to be settled for a fraction of the charges recorded, meaning much of the recent deficit will ultimately be overturned in the form of a multibillion-dollar gain upon exit from bankruptcy.
Chief Financial Officer Jake Brace said the company continues to make steady progress toward its goal of coming out of bankruptcy in February.
"United's revenue performance and cost reductions were offset by record-high fuel costs," he said. "Our restructuring work has been effective and has equipped the company to manage through the challenges the industry presents."
The company said it ended October with $2.7 billion in cash - $964 million of it restricted.
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United Airlines' parent company cites continuing reorganization charges and high fuel costs as its three-year bankruptcy overhaul draws to a finish.
The loss is a result of continuing high costs for its 33-month-old bankruptcy reorganization and the spike in fuel prices.
Had fuel costs remained unchanged, the company would have broken even for the month on a net basis.