United Airlines reports massive Q1 loss - pledges 'fundamental overhaul'

United Airlines parent, UAL Corp, announced a $537 million loss for Q1, a massive spike upwards from a $152 million deficit in the same quarter last year. Announcing these results, UAL said Tuesday that it will seek to "fundamentally overhaul every facet of our business."

On an immediate basis the airline has announced the grounding of 30 aircraft, which is a near doubling of the 10-15 units that was announced just last month. It also said it would be laying off 1,100 employees, with the cuts slated to take effect by the end of the year.

Fleet reduction would focus on the 737-500 narrow body aircraft.

"Consolidation is only one of many changes needed together with capacity discipline, new revenue streams and elimination of assets that do not earn a sufficient return, particularly in this environment," chairman, president and CEO Glenn Tilton said. "The pressure of high energy prices and a weakening economy are a wakeup call that the pace of change must accelerate."

Though operating revenue went up 7.7% to $4.71 billion, it was offset by a 15.4% increase in costs to $5.15 billion. Fuel expenses were up a whopping 51.3% to $1.58 billion. The company said it had hedged 25% of its forecast fuel consumption for the remainder of 2008

UAL's operating loss has now widened to $441 million, up significantly from $92 million in the year-ago period.

The carrier has now announced plans to reduce full-year, non-fuel, costs by an additional $200 million over and above the $200 million in cuts announced in March, and capital expenditures by $200 million.

"With a strong cash balance and more than $3 billion in unencumbered assets, we are well positioned to manage the challenges ahead," executive VP, and CFO, Jake Brace said.

Consolidated RPMs fell 3.2% year-over-year to 29.74 billion against a 0.1% dip in ASKs to 38.41 billion, dropping load factor 2.4 points to 77.4%.