Advertisement

Higher Fares Lift UAL’s Net Income

Share via
From Bloomberg News

United Airlines parent UAL Corp. said Monday that it would post its second consecutive quarterly profit after exiting bankruptcy protection as higher fares and more passengers boosted sales. The preliminary results exceeded analysts’ estimates, and the company’s shares rose.

UAL said it expected second-quarter net income of $119 million, or 93 cents a share, after a loss of $1.43 billion a year earlier, mostly because of reorganization costs. The airline emerged from three years of bankruptcy Feb. 1.

United, the world’s second-largest carrier, benefited from eight ticket-price increases this year. United and other major airlines have raised fares for the industry’s most expensive tickets by as much as 40% in 12 months.

Advertisement

United estimated that sales jumped 16% to $5.1 billion as operating revenue for each seat flown a mile increased 12%. Its total passenger traffic rose 4.2% in the first half of the year, and its planes have been 82.4% full, 1.5 percentage points more than at the same time last year.

The shares of Elk Grove Township, Ill.-based UAL rose $1.25 to $28.20.

United pared annual costs by $7 billion during three years of bankruptcy protection by trimming its aircraft fleet, ending unprofitable routes, cutting 24,000 jobs and persuading labor unions to give up traditional pension plans and accept lower wages and benefits.

“There’s more work to do” at United, Calyon Securities analyst Ray Neidl said. “If they hadn’t made a profit this quarter, people would have started asking hard questions.”

Advertisement

UAL’s profit estimate exceeded the 46-cent-a-share average forecast of analysts surveyed by IBES International.

Advertisement