Losses spiral at United Airlines

United is emerging from bankruptcy protection

United Airlines' parent company made a $21bn (£11.8bn) loss last year due to charges arising from its bankruptcy.

It suffered pre-tax losses of $16.6bn alone in the last quarter after it recognized many unsecured claims.

But UAL Corp said its underlying losses had fallen and that it would emerge from bankruptcy protection next month with a "sound financial platform".

United was one of several US carriers to seek bankruptcy protection due to soaring costs and flagging demand.

Costly claims

It is radically restructuring its business in an effort to reduce annual costs by $7bn by 2010.

We have made fundamental, sustainable changes to United's business and established a solid financial platform Glenn Tilton, United Airlines

United slumped heavily into the red last year after it was legally obliged to recognize unsecured claims as part of the bankruptcy process.

However, it believes the claims will ultimately be settled for a fraction of the $21bn figure recognized on its balance sheet.

Excluding one-off reorganization costs, United made a full-year loss of $557m in 2005, down from $729m the previous year.

UAL Corp is due to emerge from Chapter 11 bankruptcy next month after three years of restructuring.

It has cut its workforce by a quarter and secured huge pay concessions from pilots and other staff.

Brighter future?

Controversially, it was also granted permission to terminate its defined benefit pension schemes, saving $645m a year.

"We have made fundamental, sustainable changes to United's business and established a solid financial platform," said chief executive Glenn Tilton.

However, Mr Tilton admitted the company must do more to reduce costs and boost revenues.

He also warned that fuel costs would be $885m higher in the current year than previously thought.