United will take $169M in charges with 2Q results

 

The Associated Press

The parent company of United Airlines says it will take charges of $169 million against second-quarter earnings to cover costs of grounding planes and other moves.

United Continental Holdings Inc. said Thursday that it would report costs of $66 million to permanently ground 21 Embraer regional jets used by its United Express unit. The planes were leased until 2018. The company said it is grounding the planes because of high fuel prices, larger replacement jets and pilot shortages and could ground its nine remaining Embraer ERJ 135 planes in the fourth quarter.

United also cited other write-downs, costs it is still incurring from the 2010 merger of United and Continental, and $38 million in severance and benefits related to cutting jobs.

Figures released this week by the U.S. Department of Transportation showed that United cut more than 2,000 jobs, or 2.3 percent of its work force, between May 2013 and May 2014. Delta, American, US Airways and JetBlue all added jobs in that period, according to the government.

Chicago-based United is scheduled to report second-quarter results before the market opens on July 24. It lost $609 million in the first quarter while other major U.S. airlines made money, but United is expected to post a second-quarter profit.

The shares were down 7 cents to $44.83 in morning trading. They started the day up 19 percent in 2014, lagging gains of 72 percent for American Airlines Group Inc., 49 percent for Southwest Airlines Co., and 38 percent for Delta Air Lines Inc.

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