United Airlines increases profit on more revenue, cheaper fuel

by SpeedLux
United Airlines

United Airlines reported Tuesday that higher revenue and cheaper fuel helped increase its fourth-quarter profit by almost 40%, to $641 million.

The airline’s forecast of first-quarter earnings has beaten Wall Street expectations.

It is kinda unclear sailing for United, however.

The financial report came the same day that United shares fell on the fear that a virus outbreak in China could harm travel between the U.S. and Asia, a major market for the airline. Even before the outbreak, a carefully watched measure of revenue per seat was falling on United’s flights to and from Asia.

And Boeing has again pushed back its timetable for the return of the 737 Max, making it nearly impossible for United to meet its goal of putting the plane in its plan by early June. It is more possible that United will go through a second straight summer without the Max, forcing it to abandon thousands of flights and lose the earnings from those ticket sales.

Rivals Southwest and American have revealed how much the loss of their Max jets is costing them in pretax income. United has never provided a figure, and refused again on Tuesday. The company has stated only that it is talking to Boeing Co. regarding compensation.

United executives were scheduled to talk about the financial results with analysts on Wednesday.

U.S. airlines are enjoying a strong demand for travel that has permitted them to sell more high-priced seats and amenities while limiting cost increase for average fares. United has been broadening by adding flights from its U.S. hubs such as Denver, Houston and San Francisco to smaller cities.

United will replace CEOs in May, with Oscar Munoz stepping down and being replaced by Scott Kirby, the president of the company since mid-2016.

For the fourth quarter, United stated profit excluding what the company regarded as non-repeating items was $2.67 each share. That was 3 cents better than the average estimate of 17 experts surveyed by Zacks Investment Research.

Revenue increased 4% to $10.89 billion, in line with experts’ forecasts.

United added passenger-carrying capacity regardless of the loss of its Max jets, and revenue increased about two times as quickly as operating expenses. There, labor costs increased 6%, but United’s fuel spending dropped over 5% as fuel prices dropped from the same period in 2018.

Passenger revenue per mile for each seat, a sign of pricing power, increased by almost 1%, in line with United’s forecast of three months earlier. The airline predicted that the same number would be flat to up 2% in the January-through-March quarter.

United forecast adjusted revenues of 75 cents to $1.25 per share in the first quarter. Experts are expecting 72 cents each share.

Shares of Chicago-based United Airlines Holdings Inc. dropped $3.91, or 4.4%, to close Tuesday at $85.79. In the late trading, they were down 64 cents.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

SpeedLux

SpeedLux is a high-authority automotive blog providing the latest automotive news and reviews. SpeedLux covers everything related to cars, bikes, and motorcycles, from news and reviews, to troubleshooting guides, tips and tricks, and more. SpeedLux was born in 2009 and we have over 20,000 articles published on our blog. We thank all our readers, as well as our partners, without whom we could not have reached this level.

Subscribe

©2009 – 2024 SpeedLux – Daily Automotive News and Reviews. All Right Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More