Thu, Jan 24, 2008
Then Again... It May Not, Too
Following its report Tuesday of a fourth-quarter loss in
2007, United Airlines parent UAL put its chief
financial officer on a conference call to clarify the company's
short-term strategy.
United has talked before about spinning off its maintenance
operation and frequent-flier program, but has subsequently been
mentioned as a potential merger partner for Delta. That makes the
prospect of selling off those divisions a mixed bag.
"If you looked at the situation and said what would you want to
happen, you'd want to do consolidation before you did (maintenance)
or a frequent flier transaction -- that would increase the scale of
the business and the value of the business," Chief Financial
Officer Jake Brace told analysts on the call. "...it doesn't make
any sense for us to wait for consolidation to happen or not happen;
we don't control that one way or the other."
Brace said UAL is already evaluating proposals for its
maintenance business, but does not expect to make a decision in the
first quarter.
The frequent flier program might stick around longer. United is
working out the accounting details needed to break out the
program's profit and loss separately from the company as a whole.
Brace said UAL expects to have that ability by the second quarter,
but stopped short of promising those numbers would be made
public.
As for the week's hottest rumor, the company is offering no
further comment on a possible merger with Delta, or any other
consolidation planning which might be underway.
TheStreet.com reports that despite posting a smaller than
expected fourth-quarter loss of $53 million, and net income of $352
million for all of 2007, UAL stock got hammered Tuesday following
the announcement. After falling more than $2 to close at $30.92 per
share, the stock recovered much of its loss the following day,
ending Wednesday at $36.41.
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