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* Despite the continued economic turmoil in Asia, the company produced record second-quarter earnings per share of $3.24 on a fully distributed basis, up 15 percent year-over-year. * The strong performance points to United's success in effectively managing its business within challenging economic environments. * The company's ongoing cost-control efforts, as well as lower fuel costs, shaved over 2 percent off the fully distributed year-over-year unit cost. |
CHICAGO, July 22 /PRNewswire/ --
UAL Corporation (NYSE: UAL), the holding company whose primary subsidiary is United Airlines, today reported record second-quarter net earnings and earnings per share.
In accordance with Generally Accepted Accounting Principles (GAAP), 1998 second-quarter net earnings of $282 million broke the quarterly record set last year, with operating earnings also setting a second-quarter record at $470 million. In comparison, second-quarter 1997 net earnings were $242 million on operating earnings of $412 million. Second-quarter earnings per share were $2.44 versus last year's record earnings of $2.31 per share.
The company also reported that, on a pro forma, fully distributed basis (see below for further explanation of the methodology), second-quarter net earnings were a second-quarter record $418 million, up 11 percent from second- quarter 1997 fully distributed net earnings of $376 million. Fully distributed operating earnings for the quarter rose 10 percent to $702 million versus $638 million in 1997. Fully distributed earnings per share were $3.24, a 15 percent increase over second quarter 1997 earnings per share of $2.82.
"We are pleased with United's strong second-quarter performance," said Gerald Greenwald, chairman and chief executive officer of UAL Corporation. "Despite the continued turbulence in Asia, we produced record net earnings once again, which tells us that our efforts to redefine the way we do business are working. We're proving that we can manage the business astutely in both positive and negative environments.
"Our proactive and timely response to the Asian economic situation has helped us curb the effects of the region's turmoil on our business. Our disciplined efforts to keep costs under control helped reduce our fully distributed unit cost for the quarter, yet at the same time we were able to continue our efforts to improve customer service," added Greenwald. "We are making significant strides, in great part thanks to the efforts of United's 94,000 employees."
Operating revenues for the quarter increased 1.4 percent over 1997, from $4.38 billion to $4.44 billion. Available seat miles increased 2.4 percent; however, total revenue per available seat mile (unit revenue) decreased 1.2 percent to 10.29 cents compared to 10.42 cents a year ago. The unit revenue change was partly due to a slight decrease in yield (passenger revenue per passenger mile) to 12.58 cents from 12.59 cents a year ago.
Passenger revenue rose 2.4 percent to $3.95 billion from $3.85 billion in second quarter 1997, and cargo revenue increased 4.2 percent to $224 million versus $215 million in 1997.
Other revenue declined 14 percent, reflecting the sale of Apollo Travel Services last year.
Fully distributed operating expenses were unchanged from second quarter 1997 at $3.74 billion. Fully distributed operating expenses per available seat mile (unit cost) decreased 2.4 percent to 8.71 cents versus 8.92 cents a year ago.
The company's ongoing cost-control efforts helped the cost performance for the quarter, as did the 14 percent lower average price of fuel. Excluding fuel cost, fully distributed unit cost decreased by 0.6 percent.
n.b.: 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
June 30, 1998 June 30, 1997
GAAP "Fully GAAP "Fully
Basis Distributed"(A) Basis Distributed"(A)
EARNINGS
Operating revenues $ 4,442 $ 4,442 $ 4,382 $ 4,382
Operating expenses
(excluding ESOP
compensation expense) (3,740) (3,740) (3,744) (3,744)
ESOP compensation
expense (232) N/A (226) N/A
Operating earnings 470 702 412 638
Non-operating expense (41) (41) (24) (24)
Earnings before income
taxes and distributions
on preferred securities 429 661 388 614
Provision for income
taxes 146 242 145 237
Earnings before distributions
on preferred securities 283 419 243 377
Distributions on preferred
securities, net (1) (1) (1) (1)
Net earnings 282 418 242 376
Preferred stock dividends
and other (25) (2) (19) (3)
Earnings attributable
to common
shareholders $257 $416 $223 $373
SHARES
Average common shares
assumed outstanding 57.9 57.9 59.3 59.3
ESOP preferred shares
assumed outstanding 45.7 68.9 34.4 70.1
Other 1.7 1.7 2.9 2.9
Total shares assumed
outstanding 105.3 128.5 96.6 132.3
PER SHARE, DILUTED:
Net earnings $2.44 $3.24 $2.31 $2.82
(A) "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
EARNINGS AND EARNINGS PER SHARE
(In Millions, Except Per Share)
Six Months Ended
June 30, 1998 June 30, 1997
GAAP "Fully GAAP "Fully
Basis Distributed" (A) Basis Distributed"(A)
EARNINGS
Operating revenues $ 8,497 $ 8,497 $ 8,503 $ 8,503
Operating expenses
(excluding ESOP
compensation expense) (7,414) (7,414) (7,487) (7,487)
ESOP compensation
expense (490) N/A (410) N/A
Operating earnings 593 1,083 606 1,016
Non-operating expense (68) (68) (47) (47)
Earnings before income
taxes and distributions
on preferred securities 525 1,015 559 969
Provision for income
taxes 179 375 209 375
Earnings before distributions
on preferred securities 346 640 350 594
Distributions on preferred
securities, net (3) (3) (3) (3)
Net earnings 343 637 347 591
Preferred stock dividends
and other (52) (6) (38) (5)
Earnings attributable to
common shareholders $291 $631 $309 $586
SHARES
Average common shares assumed
outstanding 57.6 57.6 59.0 59.0
ESOP preferred shares
assumed outstanding 44.4 69.1 33.0 70.2
Other 1.8 1.7 2.8 2.7
Total shares assumed
outstanding 103.8 128.4 94.8 131.9
PER SHARE, DILUTED:
Net earnings $2.80 $4.91 $3.26 $4.44
(A) "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 June 30
1998 1997 % Change
Operating revenues:
Passenger $3,948 $3,854 +2.4
Cargo 224 215 +4.2
Other operating revenues 270 313 -13.7
4,442 4,382 +1.4
Operating expenses:
Salaries and related costs 1,300 1,228 +5.9
ESOP compensation expense 232 226 +2.7
Aircraft fuel 435 495 -12.1
Commissions 328 386 -15.0
Purchased services 376 310 +21.3
Aircraft rent 219 235 -6.8
Landing fees and other rent 228 224 +1.8
Depreciation and amortization 192 174 +10.3
Aircraft maintenance 141 157 -10.2
Other operating expenses 521 535 -2.6
+0.1
Earnings from operations 470 412 +14.1
Other income (expense):
Interest expense (93) (71) +31.0
Interest capitalized 30 26 +15.4
Interest income 14 11 +27.3
Equity in earnings of affiliates 21 22 -4.5
Miscellaneous, net (13) (12) +8.3
(41) (24) +70.8
Earnings before income taxes and
distributions on preferred
securities 429 388 +10.6
Provision for income taxes 146 145 +0.7
Earnings before distributions on
preferred securities 283 243 +16.5
Distributions on preferred securities,
net of tax (1) (1)
Net earnings $282 $242 +16.5
Per share, basic: $4.43 $3.77
Per share, diluted: $2.44 $2.31
See accompanying notes.
UAL CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In Millions, Except Per Share)
(In accordance with GAAP) Six Months Ended June 30
1998 1997 % Change
Operating revenues:
Passenger $7,514 $7,481 +0.4
Cargo 439 410 +7.1
Other operating revenues 544 612 -11.1
8,497 8,503 -0.1
Operating expenses:
Salaries and related costs 2,609 2,468 +5.7
ESOP compensation expense 490 410 +19.5
Aircraft fuel 876 1,049 -16.5
Commissions 645 750 -14.0
Purchased services 713 617 +15.6
Aircraft rent 452 472 -4.2
Landing fees and other rent 431 442 -2.5
Depreciation and amortization 383 350 +9.4
Aircraft maintenance 297 295 +0.7
Other operating expenses 1,008 1,044 -3.4
7,904 7,897 +0.1
Earnings from operations 593 606 -2.1
Other income (expense):
Interest expense (173) (140) +23.6
Interest capitalized 56 50 +12.0
Interest income 30 23 +30.4
Equity in earnings of affiliates 43 48 -10.4
Miscellaneous, net (24) (28) -14.3
(68) (47) +44.7
Earnings before income taxes and
distributions on preferred
securities 525 559 -6.1
Provision for income taxes 179 209 -14.4
Earnings before distributions on
preferred securities 346 350 -1.1
Distributions on preferred
securities, net of tax (3) (3)
Net earnings $343 $347 -1.2
Per share, basic: $5.05 $5.23
Per share, diluted: $2.80 $3.26
See accompanying notes.
Consolidated Notes
(A) UAL Corporation is a holding company whose principal subsidiary is
United Air Lines, Inc.
(B) "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 $84 per share during the second quarter of
1998 versus $74 per share during the 1997 second quarter. The average price
during the six-month period ending June 30, 1998, was $86 per share versus $68
per share for the same six-month period in 1997.
(C) Per share amounts were calculated after providing for dividends on
preferred stock, including ESOP convertible preferred stock, of $25 million in
the 1998 second quarter, $19 million in the 1997 second quarter, $51 million
in the 1998 six-month period ending June 30 and $38 million in the 1997 six-
month period ending June 30. 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 were as follows:
1998 1997
(In Millions)
Second quarter:
Basic 57.9 59.3
Diluted 105.3 96.6
Six-month period:
Basic 57.6 59.0
Diluted 103.8 94.8
UNITED AIR LINES, INC AND SUBSIDIARY COMPANIES
Three Months Ended June 30
1998 1997 % Change
FINANCIAL SUMMARY (UNAUDITED)
(in millions)
Operating revenues $4,431 $4,372 +1.3
Operating expenses (excluding
ESOP compensation expense) 3,738 3,742 -0.1
ESOP compensation expense 232 226 +2.7
3,970 3,968+0.1
Earnings from operations
(in accordance with GAAP) $461 $404 +14.1
OPERATING STATISTICS
Revenue passengers (in
thousands) 21,941 21,279 +3.1
Revenue passenger miles
(in millions) 31,164 30,397 +2.5
Available seat miles
(in millions) 42,939 41,937 +2.4
Passenger load factor (percent) 72.6 72.5 +0.1 pt.
Breakeven passenger load
factor excluding ESOP
charges (percent) 59.7 60.5 -0.8 pt.
Passenger revenue per
passenger mile (cents) 12.58 12.59 -0.1
Operating revenue per available
seat mile (cents) 10.29 10.42 -1.2
Operating expenses excluding
ESOP charges per available
seat mile (cents) 8.71 8.92 -2.4
Average price per gallon
of jet fuel (cents) 58.0 67.4 -13.9
Number of aircraft in operating
fleet at end of period 571 574
Number of employees at
end of period (thousands) 94.1 89.0 +5.7
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 revenues and expenses do not have a material
effect on unit revenue and unit cost.
UNITED AIR LINES, INC AND SUBSIDIARY COMPANIES
Six Months Ended June 30
1998 1997 % Change
FINANCIAL SUMMARY (UNAUDITED)
(in millions)
Operating revenues $8,475 $8,481 -0.1
Operating expenses (excluding
ESOP compensation expense) 7,407 7,478 -0.9
ESOP compensation expense 490 410 +19.5
7,897 7,888 +0.1
Earnings from operations
(in accordance with GAAP) $578 $593 -2.5
OPERATING STATISTICS
Revenue passengers (in
thousands) 41,267 40,973 +0.7
Revenue passenger miles
(in millions) 58,886 58,566 +0.5
Available seat miles
(in millions) 84,196 82,254 +2.4
Passenger load factor
(percent) 69.9 71.2 -1.3 pt.
Breakeven passenger load
factor excluding ESOP
charges (percent) 59.9 61.6 -1.7 pt.
Passenger revenue per
passenger mile (cents) 12.67 12.69 -0.2
Operating revenue per available
seat mile (cents) 10.07 10.31 -2.3
Operating expenses excluding ESOP
charges per available
seat mile (cents) 8.80 9.09 -3.2
Average price per gallon
of jet fuel (cents) 59.8 72.8 -17.9
Number of aircraft in
operating fleet at end
of period 571 574
Number of employees at
end of period (thousands) 94.1 89.0 +5.7
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 revenues andexpenses do not have a material
effect on unit revenue and unit cost.
SOURCE UAL Corporation
-0- 07/22/98
/CONTACT: Andy Plews, 847-700-2679, Joe Hopkins, 847-700-5770, or Tony
Molinaro, 847-700-4971, all for UAL Corporation/
/Web site: http://www.ual.com/
(UAL)
CO: UAL Corporation
ST: Illinois
IN: AIR
SU: ERN
JB-KK
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