|* First-quarter fully distributed earnings per share grew to a record
$1.68 despite the continued economic turmoil in Asia and the effects of
the U.S. excise tax on year-over-year comparisons.
* Fully distributed unit cost declined 4 percent, helped by the company's ongoing cost-control efforts and a decrease in the average price of fuel.
CHICAGO, April 22 /PRNewswire/ --
UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, today reported solid first-quarter net earnings despite continued weakness in Asian markets during the quarter and the effects of the U.S. excise tax, which was not in effect for most of first quarter 1997.
In accordance with Generally Accepted Accounting Principles (GAAP), 1998 first-quarter net earnings were $61 million ($0.34 per share) on operating earnings of $123 million. In comparison, first-quarter 1997 net earnings were $105 million ($0.92 per share), and operating earnings were $194 million.
Consistent with our previous statements, the company expects to improve year-over-year fully distributed earnings per share for each of the next three quarters. While year-over-year improvement in second quarter earnings is expected to be slightly less than indicated by the current First Call consensus estimate of $3.07 per fully distributed share, the company expects to slightly exceed the current full-year 1998 First Call earnings consensus of $10.26 per fully distributed share.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Information in the Outlook section of this press release is forward- looking, and actual results could differ materially from expected results. Factors that could significantly affect revenue and fully distributed earnings per share include: industry capacity decisions, the airline pricing environment, fuel prices, the success of the company's cost-control efforts, actions of the U.S., foreign and local governments, the Asian economic environment and travel patterns, foreign currency exchange rate fluctuations, the economic environment of the airline industry and the general economic environment.
While UAL Corporation reports its earnings under GAAP -- Generally Accepted Accounting Principles -- a more complete understanding of UAL Corporation's performance may be gained by viewing the results on a pro forma, fully distributed basis. This presentation considers all ESOP shares that will be issued to employees over the course of the ESOP period to be immediately outstanding, thus "fully distributed." Consistent with this presentation, the "ESOP compensation expense" -- which reflects the commitment of stock to employees -- is excluded from fully distributed expenses and ESOP convertible preferred stock dividends are not deducted from earnings attributable to common stockholders. No adjustments are made to fully distributed earnings to reflect future salary increases.
The web page address for UAL Corp. and United Airlines is http://www.ual.com.
UAL CORPORATION AND SUBSIDIARY COMPANIES EARNINGS AND EARNINGS PER SHARE (In Millions, Except Per Share) Three Months Ended March 31, 1998 March 31, 1997 GAAP "Fully GAAP "Fully Basis Distributed"(A) Basis Distributed"(A) EARNINGS Operating revenues $4,055 $4,055 $4,121 $4,121 Operating expenses (excluding ESOP compensation expense) (3,674) (3,674) (3,743) (3,743) ESOP compensation expense (258) N/A (184) N/A Operating earnings 123 381 194 378 Non-operating expense (27) (27) (23) (23) Earnings before income taxes and distributions on preferred securities 96 354 171 355 Provision for income taxes 34 135 65 139 Earnings before distributions on preferred securities 62 219 106 216 Distributions on preferred securities, net (1) (1) (1) (1) Net earnings 61 218 105 215 Preferred stock dividends and other (26) (3) (20) (2) Earnings attributable to common shareholders $35 $215 $85 $213 SHARES Average common shares assumed outstanding 57.3 57.3 58.8 58.8 ESOP preferred shares assumed outstanding 43.1 69.3 31.6 70.3 Other 1.9 1.8 2.7 2.8 Total shares assumed outstanding 102.3 128.4 93.1 131.9 PER SHARE, DILUTED: Net earnings $ 0.34 $ 1.68 $ 0.92 $ 1.61 (1) "Fully distributed" earnings and earnings per share are pro forma presentations which consider all ESOP shares which will ultimately be released to employees by the end of the ESOP period to be immediately outstanding. Therefore the ESOP compensation expense has been excluded from fully distributed earnings and ESOP convertible preferred stock dividends have not been deducted from earnings attributable to common shareholders. No adjustments are made to fully distributed earnings to reflect future salary increases. UAL CORPORATION AND SUBSIDIARY COMPANIES STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (In Millions, Except Per Share) (In accordance with GAAP) Three Months Ended March 31 1998 1997 % Change Operating revenues: Passenger $3,565 $3,626 -1.7 Cargo 215 195 +10.3 Other operating revenues 275 300 -8.3 4,055 4,121 -1.6 Operating expenses: Salaries and related costs 1,309 1,240 +5.6 ESOP compensation expense 258 184 +40.2 Aircraft fuel 441 554 -20.4 Commissions 317 364 -12.9 Purchased services 337 307 +9.8 Aircraft rent 233 237 -1.7 Landing fees and other rent 203 218 -6.9 Depreciation and amortization 191 176 +8.5 Aircraft maintenance 156 138 +13.0 Other operating expenses 487 509 -4.3 3,932 3,927 +0.1 Earnings from operations123 194 -36.6 Other income (expense): Interest expense (80) (69) +15.9 Interest capitalized 26 24 +8.3 Interest income 16 12 +33.3 Equity in earnings of affiliates 22 25 -12.0 Miscellaneous, net (11) (15) -26.7 (27) (23) +17.4 Earnings before income taxes and distributions on preferred securities 96 171 Provision for income taxes 34 65 Earnings before distributions on preferred securities 62 106 Distributions on preferred securities, net of tax (1) (1) Net earnings $ 61 $ 105 Per share, basic $ 0.60 $ 1.45 $ 0.34 $ 0.92 Consolidated Notes (1) UAL Corporation is a holding company whose principal subsidiary is United Air Lines, Inc. (2) "ESOP compensation expense" represents the estimated average fair value of ESOP convertible preferred stock committed to be released to employees for the period, net of amounts used to satisfy dividend requirements for previously allocated ESOP convertible preferred shares, under Employee Stock Ownership Plans. The fair value of ESOP convertible preferred stock is estimated based on the market value of UAL's common stock. The average market price of UAL's common stock was $88 per share during the first quarter of 1998 versus a 1997 first quarter average price of $61 per share. (3) Per share amounts were calculated after providing for dividends on preferred stock, including ESOP convertible preferred stock, of $25 and $19 million, respectively, in the 1998 and 1997 first quarters. Basic per share amounts were based on weighted average common shares outstanding. Diluted per share amounts include potential common shares including ESOP shares committed to be released. Average shares used in the computations are as follows: 1998 1997 Basic 57.3 58.8 Diluted 102.3 93.1 UNITED AIR LINES, INC. AND SUBSIDIARY COMPANIES Three Months Ended March 31 1998 1997 % Change FINANCIAL SUMMARY (UNAUDITED) (In Millions) Operating revenues $4,044 $4,109 -1.6 Operating expenses (excluding ESOP compensation expense) 3,669 3,736 -1.8 ESOP compensation expense 258 184 +40.2 3,927 3,920 +0.2 Earnings from operations (in accordance with GAAP) $ 117 $ 189 -38.1 OPERATING STATISTICS Revenue passengers (in thousands) 19,326 19,694 -1.9 Revenue passenger miles (in millions) 27,722 28,169 -1.6 Available seat miles (in millions) 41,256 40,316 +2.3 Passenger load factor (percent) 67.2 69.9 -2.7 pt. Breakeven passenger load factor excluding ESOP charges (percent) 60.1 62.7 -2.6 pt. Revenue per passenger mile (cents) 12.77 12.80 -0.2 Operating revenue per available seat mile (cents) 9.83 10.19 -3.5 Operating expenses excluding ESOP charges per available seat mile (cents) 8.90 9.27 -4.0 Average price per gallon of jet fuel (cents) 61.7 78.3 -21.2 Number of aircraft in operating fleet at end of period 572 566 Number of employees at end of period (thousands) 92.6 86.4 +7.2 Note: Revenue and expenses associated with United's dedicated freighter operations are included in the calculations of unit revenue and unit cost. However, dedicated freighter operations do not increase available seat miles, which is used as the denominator in the calculation of unit revenue and unit cost. The inclusion of these revenue and expenses do not have a material effect on unit revenue and unit cost. SOURCE United Airlines -0- 04/22/98 /CONTACT: Corporate Communications, Richard Martin, 847-700-2597, Joe Hopkins, 847-700-5770, or Tony Molinaro, 847-700-4971, or Investor Relations, Clifford Hew, 847-700-7501, all for United Airlines/ (UAL) CO: United Airlines ST: Illinois IN: AIR SU: ERN MD-CM -- CGW012 -- 9373 04/22/98 08:14 EDT http://www.prnewswire.com //Begin Meta Data// Selector Code: .c..v Copyright 1998, PR Newswire