UAL Corporation, the holding company whose primary subsidiary is United Airlines, reported a net loss of $63 million, or $0.43 per basic share, for the third quarter that ended Sept. 30. The loss excludes non-cash, net mark-to-market hedge gains and certain accounting charges, narrowing its net loss by $202 million compared to the third quarter of 2008. UAL also reported a GAAP net loss of $57 million, or $0.39 per basic share. The company also saw a year-over-year decline in consolidated passenger revenue per available seat mile (PRASM) of 14.7 percent, a 2.5-percentage-point improvement compared to the 17.2 percent decline in the second quarter of 2009.

UAL delivered a third consecutive quarter of non-fuel unit cost reduction, with mainline unit cost per available seat mile (CASM) for the quarter down 1.6 percent year-over-year, excluding fuel and certain accounting charges, despite a reduction in mainline capacity of 8.2 percent year-over-year. Mainline CASM, including fuel and excluding non-cash, net mark-to-market fuel hedge gains and certain accounting charges, was down 20.3 percent year-over-year. GAAP mainline unit cost, including these items, was down 24.8 percent.

UAL closed the quarter with total cash of $2.8 billion, unrestricted cash of more than $2.5 billion, and restricted cash of $309 million. Completed financings totaled more than $1.5 billion, including $270 million in the third quarter and nearly $1.3 billion early in the fourth quarter, raising roughly $1 billion in new liquidity. Through these financings, the company also reduced its debt and net capital lease obligations for 2010 by $215 million and for 2011 by $100 million. As a part of the $1.3 billion in early fourth quarter financings, the company also completed a $129 million financing with SkyWest, Inc., one of its regional flying partners. The agreement includes a contract extension on 40 existing aircraft as well as commitments for a small number of additional aircraft.

United was ranked the number two carrier in on-time arrivals among the major network carriers year-to-date through September, trailing the leader by less than one half of one percentage point. It said it continued to improve the quality of its products and services, with customer satisfaction scores significantly improving across the board compared to last year. “Against a challenging environment, our people are delivering improvements across the business,” said Glenn Tilton, UAL’s chairman, president and CEO. “With the work we have done and the strength of our network, we are poised to see better year-over-year unit revenue performance as economies begin to recover and business travel returns. We are again demonstrating that we can improve customer satisfaction and on-time performance even while reducing our unit costs.”

UAL reported total consolidated expense, including fuel, was down $1.4 billion year-over-year in the third quarter, excluding non-cash, net mark-to-market hedge gains and certain accounting charges. Consolidated expense, excluding fuel and certain accounting charges, was down $214 million, or 6.7 percent, as the company continued its success in reducing costs as capacity declined. Total GAAP consolidated expense, including these items, was down $1.7 billion for the quarter. But the company recorded $131 million in cash losses on fuel hedges that settled in the quarter. In addition, the company also recorded non-cash, net mark-to-market gains on its fuel hedges of $59 million. The cash losses on the contracts that settled during the quarter were offset by $123 million in cash collateral that was returned during the quarter. For the fourth quarter, the company has hedged 55 percent of its estimated consolidated fuel consumption at an average price of $75 per barrel. Excluding the legacy positions put in place in 2008, the company has hedged 43 percent of estimated consumption at an average price of $63 per barrel. For the full year 2010, the company has hedged 16 percent of its estimated consolidated fuel consumption at an average price of $74 per barrel, including hedge coverage of 43 percent of estimated first quarter 2010 consumption at an average price of $74 per barrel.

“We have made significant progress relative to last year, reporting an operating profit of $123 million excluding charges, and generating what we believe will again be leading cost control among our peers, reducing our mainline unit costs even as we reduce capacity,” said Kathryn Mikells, UAL’s chief financial officer. “We continue to take action to improve our liquidity, and after successfully executing about $1.5 billion in transactions over the last four months, our unrestricted cash balance today stands at more than $3.1 billion, with only about $90 million in debt payments remaining this year."

During the quarter, UAL announced that Jane Garvey, former administrator of the Federal Aviation Administration, has joined the UAL board of directors. It also said it will be moving its Operations Center to Willis Tower in downtown Chicago. The City of Chicago and United have agreed to an economically viable incentive program that will ensure the city is competitive with other locations and that will make financial sense for United. The package, including tax incentives, grants and job training programs, will be used to offset United's capital and facility build-out costs.

United also announced it will begin offering unlimited domestic upgrades to Mileage Plus members with elite status starting in the second quarter of 2010. In addition, Mileage Plus frequent flyers may now use their miles to book hotel stays worldwide and car rentals in the United States and Canada through a simple online booking process at www.united.com/hotelandcarawards. The airline also introduced Premier Baggage, the latest addition to the Travel Options by United portfolio, enabling customers to pay a flat price to check two standard bags at no additional cost every time they fly on a United- or United Express-operated flight in a year. United also completed conversion of all of its B747s and B767s to its new international premium class configuration. Beginning in February 2010, the company will begin conversion of its B777s.

For the rest of 2009, United said it expects mainline CASM, excluding fuel, profit sharing and certain accounting charges for the full year 2009 to be down 0.5 percent to flat year-over-year. Since the company's original guidance in January, it has reduced its projected full year mainline non-fuel costs by more than $350 million. The company expects scheduled debt and capital lease payments of $215 million and capital expenditures of approximately $70 million for the fourth quarter 2009. Complete details on United's outlook can be found in the Investor Update, available at www.united.com/ir.

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