United Air Climbs as Cost Cuts Push Earnings Ahead of Estimates

17 Apr 2019, 11:18 AM IST

(Bloomberg) -- United Continental Holdings Inc. topped Wall Street’s profit expectations as the airline lowered seat costs and boosted sales.

First-quarter earnings excluding items jumped to $1.15 a share, the airline said Tuesday in a statement, exceeding the 95-cent average of analyst estimates compiled by Bloomberg. Sales of $9.6 billion were in line with expectations.

United sees additional strength in pricing power in the second quarter, reflecting strong travel demand. But the company’s forecast of an increase of as much as 2.5 percent trailed that of Delta Air Lines Inc., which predicted a gain of up to 3.5 percent.
In a video to employees, Chief Executive Officer Oscar Munoz said United’s effort to “effectively manage our costs is working.” Costs per available seat mile excluding fuel dropped 1.8 percent in the first quarter.
United said it would keep the increase in seats flown a mile to no more than 5 percent this year, a percentage point below its previous top target.
The airline didn’t forecast a financial impact from the grounding of the Boeing Co. 737 Max, which has been removed from the airline’s schedule through early July. The airline has 14 of the Max in its fleet -- fewer than American Airlines Group Inc. and Southwest Airlines Co.

United rose 2.7 percent to $87.50 after the close of regular trading. The stock climbed 1.7 percent this year through Tuesday, trailing the 10 percent advance of a Standard & Poor’s index of major U.S. airlines.

To contact the reporter on this story: Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson