WASHINGTON (dpa-AFX) - United Continental Holdings, Inc. (UAL) and Southwest Airlines Co. (LUV) reported Thursday strong profits for the first quarter, primarily reflecting improved passenger revenues and lower operating expenses amid a significant drop in fuel expenses.
Adjusted earnings per share at both United and Southwest topped analysts' expectations, while operating revenues at United missed and at Southwest matched their estimates.
Chicago, Illinois-based United Continental reported net income of $508 million or $1.32 per share for the first quarter, compared to a net loss of $609 million or $1.66 per share in the prior-year quarter.
Excluding charges, adjusted net income for the quarter was $582 million or $1.52 per share, compared to adjusted net loss of $489 million or $1.33 per share in the year-ago quarter.
On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $1.44 per share for the quarter. Analysts' estimates typically exclude special items.
Total operating revenue for the quarter edged down 1.0 percent to $8.61 billion from $8.70 billion in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate of $8.62 billion by a whisker.
Consolidated passenger revenues edged up 0.5 percent to $7.42 billion from last year. Consolidated passenger revenue per available seat mile (PRASM) increased 0.4 percent from last year.
Consolidated revenue passenger miles and consolidated available seat miles each edged up 0.1 percent, resulting in an unchanged consolidated load factor of 81.1 percent.
Total operating expenses declined 14.2 percent to $7.87 billion from last year, with aircraft fuel expenses declining 36.1 percent from a year ago.
'We continued to improve our operational reliability and deliver products that enhance our customers' experience, including new aircraft, improved food, new inflight entertainment options and modern facilities,' UAL Chairman, President and CEO Jeff Smisek said.
United also announced refinements to its fleet plan to achieve longer-term network needs. The company now plans to remove more than 130 50-seat aircraft from its schedule by the end of 2015, and remove additional 50-seat aircraft in 2016 and beyond. It will also exchange 10 787 orders with Boeing for 10 777-300ERs for delivery beginning in 2016, and extend the life of 11 additional 767-300ER aircraft.
'We are making significant progress on our long-term plan to reduce costs, improve our margins and grow our earnings, and expect our second quarter pre-tax margin to be between 12 and 14 percent, excluding special items,' Smisek added.
Dallas, Texas-based Southwest Airlines reported net income of $453 million or $0.66 per share for the first quarter, sharply higher than $152 million or $0.22 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter was $451 million or $0.66 per share, compared to $126 million or $0.18 per share in the year-ago quarter.
On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.65 per share for the quarter.
Total operating revenues for the quarter increased 6 percent to $4.41 billion from $4.17 billion in the same quarter last year, and matched thirteen Wall Street analysts' consensus estimate of $4.41 billion. Passenger revenues rose 6.2 percent from last year to $4.18 billion.
Revenues were driven by a 6.2 percent year-over-year increase in passenger revenues and double-digit year-over-year percentage growth in freight revenues.
Gary Kelly, chairman, president, and CEO, stated, 'Customer demand was strong throughout first quarter 2015, resulting in a record first quarter load factor of 80.1 percent. As expected, first quarter 2015 passenger revenues grew in line with our available seat mile (ASM) growth of 6.0 percent, year-over-year.'
Traffic increased 7.1 percent, and capacity grew 6.0 percent from last year. Load factor increased 0.8 percentage points to 80.2 percent from the year-ago quarter.
Total operating expenses declined 8.0 percent to $3.63 billion from last year, with fuel and oil expenses declining 33.3 percent from a year ago.
The company said it continues to project about 700 aircraft by year-end, and an approximate 7 percent increase in capacity from 2014. The full year effect of 2015's expansion is also estimated to increase 2016 capacity about 5 percent.
'With the continuation of year-over-year increases in stage length and gauge, we currently expect our April 2015 passenger unit revenues to decline, year-over-year, approximately two percent,' Kelly added.
In Thursday's regular trading session, UAL is currently trading at $63.52, down $0.50 or 0.78% on a volume of 1.87 million shares, while LUV is trading at $43.69, up $0.84 or 1.95% on a volume of 1.71 million shares.
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