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Claire Norman/ MEDILL

United Continental earnings in the third quarter rose less than expected

United Continental misses third-quarter earnings expectations

by Claire Norman
Oct 24, 2013

United Continental Holdings Inc.’s third quarter earnings and revenues rose less than expected as the airline grapples with price competition and operational challenges.

Net income rose to $379 million, or $0.98 per diluted share in the quarter ended Sept. 30, from $6 million, or $0.02 per diluted share, in the year-ago period.

Excluding $211 million in special charges relating to labor agreements and costs from its merger with Continental, earnings were $1.51 per share, below the analysts’ consensus estimate of $1.55, according to Bloomberg LP.

Revenues for the quarter rose 3 percent to $10.2 billion from $9.9 billion a year ago.

“We are disappointed by the pace of our revenue improvements, and we are taking numerous actions to improve our performance to more swiftly realize our full revenue potential,” said James E. Compton, vice chairman and chief revenue officer, in a press release.
United’s passenger revenue per available seat mile, a key measure of airline profitability and efficiency, increased 2.7 percent in the quarter. That compares with 4 percent in the quarter for Delta Airlines, the company reported Monday.

Compton said United is lagging its competitors because of inaccurate demand forecasts, poor functioning of the fleet and increased competition in the Pacific region, specifically in China.

Helene Becker, managing director at Cowen and Company, wrote in a research note following the earnings report that she expects United’s passenger revenue per available seat mile to remain flat in October, in part due to the government shut down.

“Long-term we continue to like the company, however we believe the absolute short-term will not be pretty,” Becker wrote.

For the first nine months of 2013, United swung to a profit of $431 million, or $1.15 per diluted share, from a loss of $103 million, or 31 cents per diluted share, in the year-ago period. Revenue in the first nine months rose 1.8 percent to $29 billion from $28.5 billion.

Shares of the company rose 35 cents to close at $31.30 on Thursday.