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Thursday, Jan. 21, 1999 

UAL Corporation Generates Another Record Year Despite Challenges; 
Fourth-Quarter Results Exceed Estimates

Despite challenging conditions throughout the year in international markets, UAL Corp. reported another record year of net earnings today, and fourth-quarter performance surpassed industry analysts' estimates.

"We are pleased with our fourth-quarter results, especially considering the external constraints under which we were operating," says Jerry Greenwald. "Despite the continued weakness in Asian economies, increased competition in all international markets and a slower growth rate in U.S. domestic travel demand during the quarter, we posted a healthy profit -- the second highest on a fully distributed basis for a fourth quarter since deregulation. This very strong fourth-quarter performance helped make 1998 the sixth consecutive year for the company to report increased annual earnings per share.

"We attribute much of our profitable performance for the full year to the strategy we developed early in the year to address the declining situation in Asia," continues Greenwald. "We believe our experience in 1998 has well positioned us to successfully manage whatever challenges may lie ahead.

"I congratulate all employees on our excellent financial performance for the year," says Greenwald, "and commend their efforts to control costs. During the past year, employees made great strides in developing new ways to serve customers better and to improve on-time performance. The teamwork and dedication of employees companywide contributed to our 1998 success."

United's full-year and fourth-quarter pro forma fully distributed results with comparisons to 1997 are:

- Earnings per share
fourth quarter: 1.52* vs. 1.74** (down 13 percent)
1998: 10.50* vs. 9.97** (up 5 percent)

- Net earnings
fourth quarter: 189 million* vs. 231 million** (down 18 percent)
1998: 1.34 billion* vs. 1.32 billion** (up 2 percent)

- Operating earnings
fourth quarter: 357 million vs. 411 million (down 13 percent)
1998: 2.31 billion vs. 2.25 billion (up 3 percent)

*before a charge resulting from the recognition of a non-cash foreign-exchange charge
**before an extraordinary item associated with the early retirement of debt

(Note: Unless otherwise indicated, all figures represent U.S. dollars. 

Please see the end of today's NewsReal stories for a glossary and further explanation of the fully distributed basis methodology and the yen charge.)

Fully distributed basis results highlights:
- The company's full-year earnings per share* broke last year's record and beat analysts' earnings estimates. This was the sixth consecutive year for United to report a year-over-year improvement to earnings per share.

- Fourth-quarter net earnings were the second highest for a fourth quarter in the 20 years since deregulation. Earnings per share* for the quarter also surpassed analysts' earnings estimates.

- Unit cost improved for both the quarter and the full year due to the company's ongoing cost-control efforts and lower fuel costs.

Factors affecting performance:
- continued weakness in the Asian economies, particularly Japan;
- effects from the increased industry capacity, or number of seats, in the Latin American and Atlantic markets; and
- a slight drop in demand for travel in the U.S. market during the fourth quarter.

UAL Corporation's 1998 Full-Year and Fourth Quarter Operating Results

The following are UAL Corporation's operating results for the full year and the fourth quarter of 1998. All fourth-quarter comparisons are to fourth quarter 1997, and all full-year comparisons are to 1997.

(Note: Unless otherwise indicated, all figures represent U.S. dollars. Please see the end of today's NewsReal stories for a glossary and further explanation of the fully distributed basis methodology and the yen charge.)

Operating Revenues

- Operating revenues
fourth quarter: 4.3 billion vs. 4.2 billion (up 1 percent)
1998: 17.6 billion vs. 17.4 billion (up 1 percent)

- Unit revenue
fourth quarter: 9.73 cents vs. 9.94 cents (down 2 percent)
1998: 10.07 cents vs. 10.25 cents (down 2 percent)

Factors affecting revenues

- Available seat miles
fourth quarter: 43.9 billion vs. 42.5 billion (up 3 percent)
1998: 174 billion vs. 169.1 billion (up 3 percent)

- Revenue passenger miles
fourth quarter: 30.7 billion vs. 29.5 billion (up 4 percent)
1998: 124.6 billion vs. 121.4 billion (up 3 percent)

- Yield
fourth quarter: 12.09 cents vs. 12.51 cents (down 3 percent)
1998: 12.36 cents vs. 12.55 cents (down 2 percent)

- Load factor
fourth quarter: 70.1 percent vs. 69.4 percent (up 0.3 point)
1998: 71.6 percent vs. 71.8 percent (down 0.2 point)

- Cargo revenue
fourth quarter: 246 million vs. 257 million (down 4 percent)
1998: 913 million vs. 892 million (up 2 percent)

Fully Distributed Operating Expenses

- Operating expenses
fourth quarter: 3.9 billion vs. 3.8 billion (up 3 percent)
1998: 15.3 billion vs. 15.1 billion (up 0.8 percent)

- Unit cost
fourth quarter: 8.94 cents vs. 8.99 cents (down 0.6 percent)
1998: 8.76 cents vs. 8.94 cents (down 2 percent)

- Fuel cost per gallon, including tax
fourth quarter: 58.0 cents vs. 67.6 cents (down 14 percent)
1998: 59.0 cents vs. 69.5 cents (down 15 percent)

GAAP Basis Results
In accordance with Generally Accepted Accounting Principles (GAAP), fourth-quarter net earnings were 87 million dollars before the yen charge. Fourth-quarter operating earnings were 191 million dollars. For the fourth quarter of 1997, net earnings before an extraordinary item associated with early debt retirement were 32 million dollars on operating earnings of 91 million dollars.

Full-year net earnings were 854 million dollars before the yen charge. Full-year operating earnings were 1.48 billion dollars. For the full year of 1997, net earnings before an extraordinary item associated with early debt retirement were 723 million dollars on operating earnings of 1.26 billion dollars.

Note on Fourth-Quarter Non-Cash Foreign-Exchange Charge United experienced an unusual yen foreign exchange loss in the fourth quarter due to the dramatic appreciation of the Japanese yen in October. This appreciation of the yen substantially reduced the value of United's yen hedge positions, principally yen/dollar exchange agreements that expire in 1999.

In accordance with general accounting standards, this reduction must be recognized as a non-operating expense in the fourth quarter. Also in accordance with general accounting standards, the company will not recognize the corresponding future benefit it expects to gain from the stronger yen until they occur in 1998. Therefore, a timing discrepancy exists because the expected revenue gain only can be recognized in the future, while the total expected loss for the entire time period affecting the agreements in the portfolio must be recognized in the fourth quarter.

Note on Accounting Basis
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 by 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.

Definition of Airline Terms
* ASM: available seat mile, a measure of capacity
* fully distributed basis: see "Note on Accounting Basis" above
* load factor: percentage of filled seats, a measure of capacity utilization
* revenue passenger mile: one revenue passenger flown one mile, a measure of volume
* unit revenue: total revenue per available seat mile
* unit cost: operating expenses per available seat mile
* unit cost, fully distributed: operating expenses, excluding the ESOP charges, per available seat mile
* yield: passenger revenue per passenger mile, a measure of average price

WHQ Corporate Communications Unitel 700-5141