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News > Companies
UAL warns about earnings
January 13, 2000: 1:30 p.m. ET

United Airlines parent's shares drop on advisory about labor, fuel costs
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NEW YORK (CNNfn) - UAL Corp., the holding company of United Airlines, warned Thursday that it expects 2000 earnings to fall below expectations due to higher labor and fuel costs, sending the price of the company's stock sharply lower.
    At early afternoon, shares of UAL Corp.  (UAL) lost 9-3/8 to 65-3/8. The stock price drop helped lead the Dow Jones transportation average down about 47 points.
    The Elk Grove Township, Ill.-based company said it expected fully distributed earnings of $7 to $9 per share. Fully distributed earnings take the company's stock ownership plan into account.
    Analysts polled by First Call Corp. expected earnings of $9.82.
    Fuel prices could average 25 percent above 1999 levels this year, UAL said. But aside from the rising fuel prices that have plagued the airline industry for months, United also is negotiating new contracts with the unions for its pilots and mechanics, which are expected to result in wage increases.
    UAL said it expected revenue improvement in three of its four global regions: Latin America, the Pacific and North America.
    "If we were only dealing with the challenge of higher labor costs in 2000, unit cost growth would actually be consistent with recent trends," UAL Chairman and Chief Executive Officer James Goodwin said in a summary of remarks prepared for a meeting with analysts. "However, we also face the industry-wide issue of higher fuel costs for the year."
    Separately, United said it was planning to start a new unit focused entirely on promoting sales of tickets and other travel products through the Internet. 
    United said the unit would develop all such avenues, including its own Web site, partnerships with other travel sites, a group site being developed by major U.S. airlines, and access via wireless technology.
    The unit would be structured in order to attract Web-savvy talent, United said, with an entrepreneurial environment and compensation structure.     Back to top
    -- from staff and wire reports

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