On September 11, 2001, two United Air Lines aircraft were hijacked and destroyed in terrorist attacks on the World Trade Center in New York City and in a crash near Johnstown,Pennsylvania. In addition to the loss of all passengers and crew on board the aircraft, these attacks resulted in numerous deaths and injuries to persons on the ground and massive property damage. In the immediate  ftermath of the attacks, the FAA ordered all aircraft operating in the United States grounded immediately. This grounding effectively lasted for three days, and United was able to operate only a portion of its scheduled flights for several days thereafter. Passenger traffic and yields on United’s flights declined significantly when flights were permitted to resume, and United refunded significant numbers of tickets for the period from September 11 to September 25.

The following data for United were adapted (in millions) from the Securities and Exchange Commission 10-K filing for the years ending December 31, 2000 and 1999:

Year Ending December 31,

 

 

 

2000

1999

Operating income

$ 673

$1,342

Net income

52

1,204

Net cash flows from operating activities

2,358

2,415

1. Based upon the preceding data, develop an expectation of what you believe the operating income, net income, and net cash flows from operating activities would be for United Air Lines for the year ending December 31, 2001. Use the following format for your answers:

Year Ending December 31, 2001

Operating income

$___________________________

Net income

$___________________________

Net cash flows from operating activities

$___________________________

2. Would you report the loss related to the terrorist attacks separately in the income statement? If so, how?