United Continental posts poor Q2 numbers
July 27, 2012, Chicago, Il. - No one ever said that putting United and Continental together would be easy. The combined airline's second-quarter net income dropped 37 per cent as it continued to wrestle with merger-related issues.
United had warned on Tuesday that June passenger revenue rose less than it expected. The shortfall occurred because the airline didn't correctly estimate the value of tickets that had been bought but not yet used to fly.
United Continental Holdings Inc. earned $339 million for the quarter, or 89 cents per share. Excluding special items, United would have earned $545 million, or $1.41 per share. A year earlier, United earned $538 million, or $1.39 per share.
Revenue rose 1.3 per cent to $9.94 billion.
Analysts surveyed by FactSet had forecast a profit of $1.65 per share on revenue of $10 billion. Analyst estimates began dropping on Tuesday after United warned about the revenue shortfall.
Airline fares are generally higher than a year ago, boosting revenue for United's competitors. At United, per-seat passenger revenue rose just 3 per cent for the quarter, in part because of its integration issues. By comparison, Delta Air Lines posted an 8.5 per cent increase and US Airways had a 5.8 per cent increase.
United led a fare increase that took hold across the industry over this past weekend.
JPMorgan analyst Jamie Baker wrote that United's guidance appears encouraging, including better-than-expected non-fuel costs and some reduced expenses. "Offsetting these benefits is higher fuel (a common theme),'' he wrote.
Shares of the Chicago-based company fell 94 cents, or 4.6 per cent, to $19.47 in morning trading.