United Airlines Parent Posts $1.3 Billion Loss
UAL, the parent company of United Airlines, said this morning that it lost $1.3 billion in the fourth quarter of 2008, partly from operating losses but also from bad bets on fuel hedges.
Airlines typically try to hedge against high fuel prices by buying futures at a set price, anticipating that the prices will actually rise higher. When oil was trading at $147 per barrel in July, buying futures for, say, $100 per barrel looked like a good idea.
But with oil trading now at $40 per barrel, the bets go terribly wrong: Airlines still have to pay the equivalent of $100 per barrel for oil, losing $60 for each barrel that is turned into jet fuel.
As a result, UAL recorded more than $900 million in hedging losses in the fourth quarter.
Even without the hedging losses, though, UAL would have posted a loss as the ongoing recession hammered the travel industry.
United said it would let go another 1,000 workers by the end of the year in addition to the 1,500 already announced.
-- Frank Ahrens
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Frank Ahrens
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January 21, 2009; 10:14 AM ET
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| Tags: UAL, United Airlines, recession
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Posted by: hisroc | January 21, 2009 10:09 PM | Report abuse
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Good. The current management of United has taken a first-class air carrier and turned it into a fleet of flying Greyhound buses. Their customer service is non-existent and they spit on the customers who once made them the largest airline in the country. I used to be a Premier Exec frequent flyer and now wouldn't get on a United flight at gunpoint.
One of these days the retail and service sectors of our economy are going to discover that a customer ignored is a customer lost forever. Consumers have looooong memories.