UAL Corp. reported a $1.1 billion first-quarter loss yesterday, its biggest in two years, as it embarked on a high-stakes bid to further cut costs by rewriting two unions' contracts.
The loss was disclosed a day after a Bankruptcy Court judge approved United Airlines' plan to end employee pension plans, clearing the way for the largest corporate-pension default in American history.
The company has now lost $5.8 billion since entering bankruptcy in December 2002.
The first-quarter results were released shortly before the start of what is certain to be a contentious trial in federal bankruptcy court over United's proposal to unilaterally impose new lower-cost contracts on its mechanics' and machinists' unions.
Negotiations have so far failed to produce agreements, and both unions' memberships have authorized strikes if the contracts are broken without their consent.
United said it had a $250 million operating loss for the first three months of 2005 due mostly to $202 million in additional fuel expenses than a year earlier. That compared with a $211 million operating loss in the first quarter of 2004.
The net loss of $1.1 billion, or $9.23 per share, included two huge restructuring costs: $433 million related to the termination of ground workers' pensions and $294 million for rejected aircraft leases. That compared with a loss of $459 million, or $4.17 per share, a year earlier.
Revenue was virtually unchanged from a year ago at $3.9 billion.