United Airlines posts 4Q profit of $140 million
- Article by: JOSHUA FREED
- Associated Press
- January 23, 2014 - 2:20 PM
The parent of United Airlines said Thursday that it earned $140 million in the fourth quarter, as more passengers flew and paid more for their tickets. The airline's fuel bill also shrank.
Its shares fell, though, after a disappointing prediction for revenue growth in the current quarter.
Net income at United Continental Holdings Inc. amounted to 37 cents per share. A year earlier it lost $620 million, or $1.87 per share.
Not counting special charges, United would have earned 78 cents per share — well above the 66 cents expected by analysts surveyed by FactSet.
Revenue rose more than 7 percent to $9.33 billion, also higher than analysts had expected.
Passengers paid 3 percent more per mile to fly compared to a year earlier. They paid more in add-on fees, too. United said ancillary revenue, which covers items such as baggage fees and seats with more legroom, rose 15 percent in the quarter to nearly $21 per passenger.
Fuel expenses fell 4 percent to $2.97 billion for the quarter.
United said in November that it intends to cut $2 billion in annual costs. The company is still working to integrate Continental after their 2010 merger. Although all the paint on the planes and the signs at the ticket counters read "United," the company still has to schedule flight crews and planes separately for the two airlines, reducing the savings from the merger.
"We have a lot of work ahead of us to deliver the financial results we're capable of but I am confident that we have the plans, the people and the focus to reach our long-term potential," chairman and CEO Jeff Smisek said on a conference call.
United said it expects a key measure of revenue to be flat to up 2 percent in the current quarter. Its main competitor, Delta Air Lines, on Tuesday predicted growth of up to 4 percent. Analysts expect Delta to report a profit in the first quarter of 27 cents per share, excluding items, but are forecasting a loss for United of 29 cents per share.
United's guidance means its first-quarter loss would, at best, meet expectations, and at worst be as large as last year's adjusted loss of 98 cents per share, JPMorgan analyst Jamie Baker wrote.
"2014 appears off to a somewhat inauspicious start for UAL," he wrote.
Snowstorms and a cold snap earlier this month caused thousands of cancellations across all the big airlines, including some 6,000 flights canceled by United. The storm hurt revenue by about $80 million as some business travelers ended up not making their trips, United said. The impact on profits was less than that because the canceled flights meant the airline didn't burn as much fuel.
For all of 2013, United earned $571 million, after losing $723 million in 2012. Revenue rose 3 percent to $38.28 billion.
Shares of the Chicago-based company fell $1.18, or 2.4 percent, to $48. They set a new 52-week high on Wednesday at $49.20
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