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United Airlines Holdings Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 15, 1999
Period End
December 31, 1998
Security
UAL
In the record · 2016–202610-K1110-Q338-K265

UAL filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 265 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Apr ’17Apr ’17
  2. Material agreement8-K · May ’19May ’19
  3. Leadership change8-K · Jul ’21Jul ’21
  4. Leadership change8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-K filed March 15, 1999. Cited figures are marked; the original filing is the authoritative source.

UAL Corporation, the holding company for United Air Lines, Inc., reported 1998 operating revenues of $17.56 billiona and net earnings of $821 million ($6.83 per share, diluted), down from $949 million ($8.95 per share) in 1997.

Earnings from operations rose to $1.478 billionb from $1.259 billion in 1997, but results were pulled down by $(222) million of net other expense, driven by $355 million of interest expense and $84 million of foreign exchange losses. The company's ESOP compensation expense was $829 million in 1998 versus $987 million in 1997. On a Fully Distributed basis, which excludes ESOP compensation expense, net income was $1.308 billion ($10.24 per share) for 1998.

United carried more than 238,000 passengers per day and flew more than 125 billion revenue passenger miles in 1998, and it operated 577 jet aircraft at year-end. Operating cash flow was $3.194 billionc and capital additions were $2.832 billion, while commitments for aircraft and equipment purchases totaled approximately $6.8 billion. The company reported cash and short-term investments of $815 million and a working capital deficit of $2.760 billion.

Management forecast 1999 Fully Distributed earnings of $10.00 to $12.00d per share, with an internal goal of $11.00, and noted that the 1994 recapitalization gives employees roughly 55% of the equity and voting interest, with employee ownership at approximately 65.73% at year-end 1998 under the Sunset measurement. The company does not pay common dividends and repurchased $459 million of common stock in 1998, completing a $500 million program in January 1999.

Year 2000 remediation is estimated at about $90 million, and the filing states that a Year 2000 failure at the company or its critical business partners could materially affect results. Labor is a significant factor, with about 82% of United's employees represented by unions and several contracts becoming amendable in 2000.

02—Key points

Key Highlights

  1. Operating revenues of $17.561 billion in 1998, up from $17.378 billion in 1997
  2. Net earnings of $821 million, or $6.83 per diluted share, versus $949 million, or $8.95, in 1997
  3. Earnings from operations of $1.478 billion, up from $1.259 billion in 1997
  4. Fully Distributed net income of $1.308 billion ($10.24 per share) for 1998, excluding ESOP compensation expense
  5. Operating cash flow of $3.194 billion and property additions of $2.832 billion
  6. Aircraft commitments of approximately $6.8 billion, with about $2.7 billion due in 1999
  7. 1999 guidance of Fully Distributed earnings of $10.00 to $12.00 per share, with an internal goal of $11.00

03—Questions

Frequently Asked Questions

  1. Does UAL pay dividends to common shareholders?

    No. The filing states that no dividends have been declared on the common stock during the past five years and that the company has no immediate plans to pay cash dividends.

  2. How did UAL use its cash in 1998?

    The company repurchased $459 million of common stock in 1998 and completed a $500 million repurchase program in January 1999. It also spent $2.832 billion on property additions, while receiving $452 million from property dispositions and issuing $928 million of debt.

  3. What is the employee ownership structure?

    The 1994 recapitalization gave certain United employees an approximately 55% equity and voting interest in UAL through ESOPs, with the interest allocated over time through 2000. Employee ownership was approximately 65.73% at December 31, 1998 under the Sunset measurement, and the Voting Preferred Stock carries about 55% of the vote on most matters.

  4. What are the main risks mentioned in the filing?

    The filing cites jet fuel prices (every $.01 change in the average annual price per gallon changes annual fuel costs by about $31 million), union contract negotiations, Year 2000 readiness of the company and its critical business partners, competition from low-cost carriers and foreign flag carriers, and possible changes to high-density slot rules at Chicago O'Hare, Kennedy and LaGuardia.

  5. How did labor costs change?

    Salaries and related costs rose to $5.341 billion in 1998 from $5.018 billion in 1997, reflecting ESOP mid-term wage adjustments and increased staffing in customer-oriented positions. The filing also says the Vision 2000 wage and benefit changes will cause salaries to rise faster than those of major competitors through 2000.

04—Continue

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