United Continental Posts Strong Profit Growth--Update
April 16 2019 - 05:31PM
Dow Jones News
By Alison Sider
United Continental Holdings Inc. reported a doubling of its
first-quarter profit that outstripped expectations, helping lift
the airline's shares in after-hours trading.
Chicago-based United also said Tuesday that it expects to
increase its flight capacity by 4% to 5% this year, down from
previously planned growth of as much as 6%.
Some investors said earlier this year that U.S. carriers looked
poised to add too much capacity this year, outpacing demand and
potentially leading to lower fares that could hurt margins.
For the first quarter, United reported a 6.2% increase in total
revenue to $9.6 billion. Unit revenue rose 1.1% from a year
earlier; in January the carrier had projected the closely watched
figure that measures how much airlines make per seat mile flown
would be flat or up as much as 3%.
Airlines were challenged in the first three months of this year
by extreme winter weather, the federal government shutdown and the
grounding of the global fleet of Boeing 737 MAX planes following
the deadly crash last month of an Ethiopian Airlines jet.
Still, United, the No. 2 U.S. carrier by traffic, reiterated
guidance for adjusted earnings of $10 to $12 a share this year and
said it expects unit-revenue growth of 0.5% to 2.5% in the second
quarter.
The airline didn't say why it trimmed its capacity growth
projection for this year. Cowen & Co. analyst Helane Becker
wrote in a client note that the pullback was likely due to the
grounding of the MAX "as well as normal adjustments."
Several carriers have had to cut back on flying plans this
summer amid uncertainty about when MAX jets will be allowed to fly
again.
United, which operates 14 of the Boeing models, said on Monday
that it would keep the jets out its schedule into early July, while
Southwest Airlines Co. and American Airlines Group Inc. have cut
the plane from schedules into August.
United said in a securities filing last month that the grounding
of the aircraft wouldn't have much of an immediate operational or
financial impact, but that the effect could grow if the MAX remains
out of service into summer.
United's profit in the first quarter rose to $292 million, or
$1.09 a share, from $145 million, or 51 cents a share, in the
year-earlier period. Adjusted earnings of $1.15 a share surpassed
the 95 cents a share analysts were expecting.
The airline said it paid $2.02 billion for fuel in the quarter,
an increase of 3% from a year earlier. Salaries and related costs
were up about 5%.
United's shares rose 2.7% in after-hours trading.
Write to Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
April 16, 2019 18:16 ET (22:16 GMT)
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