United Doubles Profit Amid MAX Grounding -- WSJ

Date : 04/17/2019 @ 8:02AM
Source : Dow Jones News
Stock : United Continental Holdings, Inc. (UAL)
Quote : 87.71  -0.32 (-0.36%) @ 6:31PM

United Doubles Profit Amid MAX Grounding -- WSJ

United Continental Holdings, Inc. (NASDAQ:UAL)
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By Alison Sider 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 17, 2019).

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 of 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 17, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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