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United Continental Posts Wider Q4 Loss, Southwest Profit Down 49%

United Continental Posts Wider Q4 Loss, Southwest Profit Down 49%
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United Continental Holdings Inc. (UAL: Quote) on Thursday reported a loss for the fourth quarter that widened from last year, reflecting one-time charges, lower revenues and higher operating expenses. The company's traffic and capacity declined from last year, while load factor edged up.

Meanwhile, Southwest Airlines Co. (LUV: Quote) reported a 49 percent decline in profit for the fourth quarter from last year, as higher operating expenses more than offset an increase in revenues. Traffic, capacity and load factor for LUV also were down slightly.

Chicago, Illinois-based United Continental's fourth-quarter net loss was $620 million or $1.87 per share, wider than loss of $138 million or $0.42 per share in the year-ago period. However, adjusted loss per share was narrower than analysts' estimates.

United Continental Holdings was formed through a merger of United Airlines and Continental Airlines in October 2010.

Excluding $430 million of special charges that include integration-related costs, net loss for the quarter was $190 million or $0.58 per share. This compared to adjusted net income of $109 million or $0.30 per share for the quarter. Analysts expected the company to report loss of $0.61 per share for the quarter.

The company also noted that Superstorm Sandy reduced fourth-quarter revenue by about $140 million and profit by about $85 million.

Total operating revenue declined 3 percent to $8.70 billion from $8.93 billion in the year-ago period. Analysts had a consensus estimate of $8.67 billion. Consolidated passenger revenue for the quarter decreased 4 percent to $7.53 billion.

For fiscal 2012, United Continental's net loss was $723 million or $2.18 per share, compared to net income of $840 million or $2.26 per share in the prior year.

Excluding $1.3 billion of special charges, net income for the year was $589 million or $1.59 per share. This compared to net income of $1.32 billion or $3.49 per share last year.

Total operating revenue for the year edged up 0.1 percent to $37.15 billion from $37.11 billion in the previous year.

Analysts expected the company to earn $1.59 per share for the year on revenues of $37.12 billion.

Meanwhile, Southwest's results for the latest quarter include those of AirTran Airways since the May 2, 2011 acquisition date. Adjusted earnings per share were flat with last year, but beat analysts' estimates, while revenues missed their expectations.

The Dallas, Texas-based company noted that once fully implemented in April, it expects the connected Southwest and AirTran networks to contribute incremental revenue in 2013 and provide significant opportunities to optimize the combined network.

The airline's operating expenses for the quarter increased 3 percent from the year-ago period to $4.08 billion, primarily reflecting a 5 percent increase in salary, wages and benefits. Fuel and oil expenses edged up less than 1 percent.

Southwest's fourth-quarter net income was $78 million or $0.11 per share, down from $152 million or $0.20 per share in the prior-year quarter. The latest quarter's results include $13 million of favorable special items, while the prior-year results included favorable special items totaling $86 million.

Excluding items, adjusted net income for the quarter was $65 million or $0.09 per share, compared to $66 million or $0.09 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.08 per share for the third quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the quarter increased 2 percent to $4.17 billion from $4.11 billion in the prior-year period, but missed analysts' consensus estimate of $4.21 billion. Passenger revenues rose 2 percent from last year to $3.94 billion.

For fiscal 2012, Southwest's net income more than doubled to $421 million or $0.56 per share from $178 million or $0.23 per share in the previous year. Adjusted net income was $417 million or $0.56 per share, compared to adjusted net income of $330 million or $0.43 per share in the prior year.

Total operating revenues for the year grew 9 percent to $17.09 billion from $15.66 billion last year.

Analysts expected the company to earn $0.53 per share for the year on revenues of $17.12 billion.

Looking ahead to the first quarter of fiscal 2013, Southwest expects economic fuel costs, including fuel taxes, to be about $3.30 per gallon. This also includes $0.05 per gallon in unfavorable cash settlements for fuel derivative contracts. The company recorded economic fuel costs of $3.44 per gallon in the year-ago period.

Gary Kelly, Chairman of the Board, President, and Chief Executive Officer of Southwest said, "As we enter 2013, bookings and revenue trends, thus far, suggest a year-over-year improvement in January 2013 passenger unit revenues in the two to three percent range. While the effect of U.S. tax increases on the domestic economy remains uncertain, bookings for the remainder of first quarter, thus far, are strong."

UAL closed Wednesday's trading at $25.00, down $0.20 on a volume of 5.52 million shares.

LUV closed Wednesday's trading at $11.36. In Thursday's pre-market, the stock is up $0.09 or 0.79 percent to $11.45.

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by RTT Staff Writer

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