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07/29/2002  16:00:03 EST
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UAL 5.95 1.17
UAL Union: Company Needs Loan

CHICAGO (AP) - A union representing 26,000 flight attendants at United Airlines said Monday that it supports efforts by UAL Corp. to secure $1.8 billion in loan guarantees to back a fully secured $2 billion loan from the federal government.

The Association of Flight Attendants described the loan guarantee as "the most effective solution to United's post-Sept. 11 liquidity challenges."

Shares of the company fell dramatically last week after United said that unless it gets a loan guarantee from the federal government, it would have trouble meeting its debt obligations later this year.

United submitted an application to the Air Transportation Stabilization Board in June citing "short-term financing needs" and "severely restricted" access to capital markets.

The company also submitted a business plan demonstrating its ability to repay the loan.

To date, only America West Holdings Corp. has received money from the board, which was set up by Congress last September and has $10 billion in loan guarantees to give airlines that can demonstrate need.

Applications from US Airways Group Inc. and American Trans Air, a unit of ATA Holdings Corp., are still pending.

According to a June 25 article in The Wall Street Journal, applicants who have cut their costs are favored by the board.

United, the nation's second-largest carrier, has cut $3 billion in capital-spending plans and saved $950 million over three years in contracts with its 11,000 salaried employees and 9,200 pilots. However the company's machinists' unions and flight attendants' unions have rejected similar cuts in pay.

07/18/2002  18:00:17 EST
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UAL 7.53 0.42
EEOC Sues United Airlines
Associated Press Writer

CHICAGO (AP) - The U.S. Equal Employment Opportunity Commission sued United Airlines on Thursday, accusing the company of discrimination by allegedly rescinding a job offer to an applicant after learning he was diabetic.

The lawsuit alleges Robert Zackery was offered a job in June 1997 as a ramp serviceman at United's facility at O'Hare International Airport, said John P. Rowe, EEOC's district director in Chicago. The offer was contingent on Zackery passing a medical examination, which showed the applicant has insulin-dependent diabetes, Rowe said. United then revoked its job offer.

"What United did violated the ADA (Americans with Disabilities Act) because there was no good reason to believe Zackery could not perform the job he was offered," said John C. Hendrickson, the EEOC's regional attorney in Chicago. "It looks like United just had a knee-jerk reaction on learning of his diabetes, which had never been a problem, and decided to dump on him because it saw him as disabled."

United spokesman Joe Hopkins said the company does not comment on pending litigation.

"United Airlines has been very proud of its record in hiring disabled people over the years. I think we have a great record in that area," he said.

Hopkins said ramp servicemen perform various tasks such as loading baggage and driving vehicles. He said the airline has a policy regarding diabetics who are ramp servicemen because there is a chance an accident could happen if a diabetic ramp serviceman has a diabetic attack while he is driving.

"We will hire them if their diabetes is under control and if they agree to monitor their blood sugar levels," Hopkins said, adding he didn't know if that was the airline's policy in 1997. "People who suffer from diabetes are not denied an opportunity to work as ramp servicemen at United Airlines if they agree to these conditions."

But Hendrickson said Zackery "signed an agreement to do exactly that and they still refused to hire him."

The lawsuit seeks damages and the value of pay and benefits lost by Zackery. The EEOC said it filed the lawsuit after efforts to reach a settlement with the airline failed.

Last month, the EEOC sued United over a ramp worker's claims she was sexually and racially harassed and retaliated against after she complained. That lawsuit alleges the worker, who is black, was regularly called racial epithets by her supervisor at O'Hare. When she complained, she was reassigned and ultimately fired from the airline.

American Eagle to Eliminate 14 Jets
17 JULY 2002

FORT WORTH, Texas (AP) - AMR Corp.'s American Eagle said Wednesday it has agreed to eliminate 14 regional jets, eventually turning them over to Trans States Airlines.

AMR, the parent of American Airlines, said it is eliminating the 50-seat ERJ-145 jets to comply with a labor agreement with the union representing American's pilots.

Under a contract with the Allied Pilots Association, American Eagle can operate up to 67 aircraft with more than 44 seats. Eagle plans to take delivery of new 70-seat Bombardier CRJ planes that would put the carrier at the cap in January. The airline was unable to reach agreement with the union to eliminate the cap.

Trans States Airlines is an AmericanConnection carrier, delivering passengers from smaller airports to American flights.

No financial details were disclosed.

American Airlines Reports $495M Loss
AP Business Writer
17 JULY 2002

DALLAS (AP) - The parent company of American Airlines, the nation's largest airline, said Wednesday that it lost $495 million in the second quarter and blamed the result on low fares driven by discount carriers.

AMR Corp. officials said they were looking for new ways to cut costs to compete with low-fare operators, and they lamented the continuing downturn in lucrative business travel.

American, however, will not be content to wait for an upturn in the economy, they said.

"We have to find a way to make money in the current environment, the way Southwest Airlines and JetBlue (Airways) make money in this environment," said chief financial officer Jeffrey Campbell. He said the discount carriers achieved greater productivity with their people and planes.

AMR said that its loss in the three months ended June 30 was $3.19 per share, compared with a loss of $507 million, or $3.29 per share, in the same period last year.

Excluding a charge for lost tax credits, the loss would have been $465 million, or $3 per share. On that basis, analysts surveyed by Thomson Financial/First Call had expected a loss of $3.04 per share.

Revenue was $4.48 billion, down 20 percent from the $5.58 billion of a year earlier and below the $4.61 billion expected by analysts.

Campbell said AMR could withstand such huge losses longer than some of its competitors, most of whom have also lost staggering sums since Sept. 11. He said AMR has $2.6 billion in cash and $6 billion in aircraft that could be mortgaged.

AMR chairman and chief executive Donald J. Carty said passenger traffic has "rebounded nicely since last fall," but average fares are at 15-year lows, sharply depressing profits.

The airline's revenue rose and its net loss narrowed for the third straight quarter. Net loss has decreased from $798 million in the fourth quarter of last year to $575 million in the first quarter and $495 million in the second.

"It's heading in the right direction," said Helane Becker, an analyst with Buckingham Research Group. "On a sequential basis, the (second-quarter) numbers didn't look bad. But the improvement isn't as fast as people would like."

Becker, who has a "neutral" rating on the company's stock, said the challenge for American and other major carriers is to improve profits by raising fares. Several recent efforts to raise prices have faltered amid resistance from one or more rivals.

Investors remained concerned about the slow pace of recovery at the major carriers. In trading Wednesday, shares in Fort Worth-based AMR fell 40 cents to $12.87, to a one-year low.

After the terrorist attacks of Sept. 11, in which two American jets were hijacked and crashed, the company cut the size of its fleet, delayed capital spending and laid off workers to deal with a drop-off in air travel.

The work force at AMR, which also owns TWA and the American Eagle commuter airline, has fallen from 128,000 to 112,000 in the past year. Carty has said the airline won't need as many employees in the future, but officials said no layoffs are planned.

American has been hurt more than most airlines by what CFO Campbell termed an "excruciatingly slow return" of business travelers. The airline has responded by reducing the frequency of flights on some popular business routes, such as Dallas-Chicago and San Francisco-New York, reassigning the planes to more leisurely routes to destinations in the Caribbean and Florida.

James Higgins, an analyst with Credit Suisse First Boston, praised the decision to reduce flights on business-traveler routes but expressed concern about American's estimate that it will increase capacity late this year by 10 percent to 12 percent over last year's moribund fourth quarter.

"The reason revenue is so weak is there's too much capacity," Higgins said. "The less the better, as far I'm concerned."

For the first six months of the year, Fort Worth-based AMR lost $1.07 billion, or $6.90 per share, compared to $550 million, or $3.58 per share in the first half of 2001. Revenue has fallen nearly 17 percent, to $8.62 billion from $10.34 billion.

The June quarter results included a $30 million after-tax charge because it expects to lose tax credits for taxes already paid to other countries where the airline operates. The loss of tax credits was a side effect of an accounting provision that Congress included in a post-Sept. 11 airline industry-bailout law.

07/16/2002  20:21:57 EST
Frontier Air, Workers Reach Deal

DENVER (AP) - Frontier Airlines reached a tentative three-year agreement with the union representing its maintenance employees in three cities.

The deal with the International Brotherhood of Teamsters was announced Tuesday, but no details were released. The contract must be ratified by the 312 Frontier aircraft maintenance technicians, tool room attendants and ground service equipment technicians.

The union and its locals in Denver, Phoenix and El Paso, Texas, endorsed the agreement.

The deal was reached after less than one year of negotiations. Frontier president and chief executive Jeff Potter said the contract is fair and helps both the airline and its maintenance workers.

Denver-based Frontier and its affiliate Frontier JetExpress serve 34 U.S. cities with 170 daily flights. Frontier is the second-largest carrier at Denver International Airport, after United.

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