United Airlines posts higher passenger unit revenue
United Continental Holdings said on Tuesday passenger unit revenue rose 2.1 per cent in the second quarter, but unit operating costs, excluding fuel, rose more than 3 per cent as rising labor costs weighed on the industry.
The third largest US airline by passenger traffic outperformed analysts' expectations on key financial metrics, posting adjusted earnings per share of US$2.75, versus analysts' consensus forecast of $2.67.
Excluding special charges, United posted net income of $846 million and a pretax margin of 13.2 per cent.
The solid financial results for the period ended on June 30 came despite consumer outrage over an April incident in which a paying passenger was dragged off a United flight.
The company eventually settled with the passenger for an undisclosed amount and promised changes to company policy in hopes of winning back goodwill.
In the second-quarter report, United posted a 79 per cent decline in the number of passengers involuntarily denied boarding in May and an 88 per cent drop in June, following the uproar over the dragged passenger.
The airline performed better than expected on revenue, pulling in $10 billion, up 6.4 per cent year over year, versus analysts' consensus of $9.97bn.
Despite gains in several measures, United shares fell in after-hours trading as much as 3.5 per cent. Airline shares were down industry-wide at market close.
United also said on Tuesday it would delay taking four Airbus A350 jets from 2018 and it would accelerate its order of 12 Boeing 737 Max aircraft into 2019 and two Boeing 787-10 aircraft within 2019.
United's deferral of the four A350s marks another blow for the Airbus jetliner designed to challenge Boeing's carbon-fiber composite 787 Dreamliner. It comes after Qatar Airways canceled four A350 orders earlier this month, citing delivery delays. Delta Air Lines said in May it would put off taking delivery of 10 A350s.
Despite its deferrals, Delta still took delivery of its first A350 earlier this month, and it will be the first North American airline to operate the new jet later this year. The A350 will mainly fly on routes between the United States and Asia, replacing older Boeing 747 aircraft, Delta said.
The Qatar Airways decision meant Airbus would need to resell or reallocate the 283-seat jets at a time when demand for big planes is weak.