United's snow hit: $40 million

Carrier forced to cancel 3,900 flights in Denver, Chicago

Chris Walsh, Rocky Mountain News

Published January 6, 2007 at midnight

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Severe snowstorms in Denver and Chicago last month forced United Airlines to cancel 3,900 flights, lowering its fourth-quarter revenue by $40 million, the carrier said Friday.

United did not provide a breakdown of canceled flights but said the majority were into and out of Denver, which was hit by consecutive blizzards over the holidays. A strong snowstorm pounded Chicago earlier in December, followed by lighter snows throughout the month.

Chicago and Denver are United's two biggest hubs, respectively.

The revenue hit was tied primarily to travelers who opted to receive refunds rather than rebook. The Chicago-based carrier also lost out on some highly profitable last-minute fares, although "at that time of year the flights are fairly full anyway," company spokeswoman Jean Medina said.

The back-to-back storms here caused roughly 4,000 overall flight cancellations at Denver International Airport, disrupting plans for more than 400,000 travelers trying to get into, out of or through the Mile High City at one of the busiest times of the year. During the first storm before Christmas, DIA closed for 45 hours.

United axed more than 2,000 departures and arrivals at DIA over a three-day period during the initial storm, followed by hundreds more last week from the second blizzard.

The 3,900 total cancellations from the storms in Denver and Chicago amount to about $10,200 per flight in lost revenue. The carrier also faced higher expenses tied to extra overtime and other factors.

United now expects to book a modest operating loss for the fourth quarter. Analysts, on average, had been expecting a profit of 24 cents per share on revenue of $4.83 billion, although some had previously indicated the blizzards could push the company to a loss.

"To be honest $40 million is not a lot" for a company United's size, said Alan Sbarra, a principal in San Francisco-based aviation consulting firm Roach & Sbarra.

"It's kind of the cost of operating in the markets they're in. You gotta expect that to happen. The problem is it's probably $40 million that would've gone directly to the bottom line."

United also said Friday that its passenger traffic in December declined by nearly 1 percent over the same month a year earlier.

A loss would mark United's first since posting consecutive quarterly profits after emerging from bankruptcy in early February 2006.

The carrier isn't the only one that took a financial hit.

Denver spent an estimated $9.6 million cleaning up after the blizzards, including $6.4 million for DIA.

Frontier Airlines, Denver's second-largest carrier behind United, is expected to offer guidance next week when it releases traffic results. Some observers predict the carrier could lose $13 million or more.

By the numbers

$40 million: Amount United Airlines lowered its fourth-quarter revenue because of snowstorms in Denver and Chicago

2,000 Approximate United flights canceled at DIA for pre-Christmas blizzardSource: Ual Corp.

walshc@RockyMountainNews.com or 303-954-2744

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