United Continental Holdings Inc.
) Sep 2013 airline traffic - measured in revenue passenger miles
or RPMs, which imply revenue generated per mile per passenger -
increased 1.0% year over year to 16.65 billion. Consolidated
capacity (or available seat miles/ASMs) for the month was 20.13
billion, up 0.2% from Sep 2012. Shareholders reacted negatively
to the news as the script ended in red with a drop of 2.36%.
The load factor (percentage of seats filled by passengers)
improved to 82.7% from 82.1% in the same month, last year. The
company registered a completion factor of 99.4%, with nearly
84.7% of the flights on schedule. Passenger revenue per available
seat mile (PRASM) is estimated to be flat with last year.
According to the company, an adjustment related to yields on
certain interline tickets impacted the consolidated PRASM by a
percentage point during the month.
For the first nine months of 2013, United Continental
generated RPMs of 155.98 billion (down 1.0% year over year) and
ASMs of 185.66 billion (down 2.6% year over year). Load factor
was 84.0%, reflecting growth of 130 basis points.
On Sep 27, 2013 the company indicated weak PRASM expectations
for September and cited that the reduction is due to lower
passenger pay per mile in some of its trans-Atlantic route and
addition of capacity in China by competitors.
Despite these headwinds, United is concentrating on improving
its business prospects through a number of initiatives. The
carrier is planning to expand its domestic service by connecting
Elmira, Topeka and States College with Chicago from the beginning
of next year.
Additionally, United got the approval from the U.S. Department
of Transportation to start transcontinental services from San
Francisco to Chengdu in China, thereby expanding its operations
in the Asia Pacific region.
Delta Airlines Inc.
) recent tie-up with Virgin will give its archrival more control
over the transatlantic route with nine daily roundtrip flights
across the region. Other risk factors such as high non-fuel
expenses and sluggish economic conditions are also detrimental to
Another major U.S. airline
Southwest Airlines Co.
) recently reported improved September performance, yielding
growth on every operating performance. However, 7-8% increase in
PRASM remains the highlight of the quarter for the budget
United which operates with
JetBlue Airways Corp.
), carries a Zacks Rank #3 (Hold).
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