United Continental Holdings Inc.
) - the largest U.S. airline - reported lackluster performance in
the fourth quarter and full year 2012. The results were dampened
by higher charges related to wages and aircraft maintenance
In the fourth quarter, the company posted loss of 58 cents per
share, wider than the Zacks Consensus forecasted loss of 54
cents. Comparing year over year, the results plunged considerably
from a profit of 30 cents per share.
Quarterly total revenue dropped 2.5% year over year to $8.70
billion. The result was almost on par with the Zacks Consensus
Estimate of $8.69 billion. On an annualized basis, passenger and
cargo revenues decreased 3.6% and 14.7%, respectively, while
other revenue increased 11.8%.
For full-year 2012, United Continental witnessed earnings of
$1.59 per share (missing our projection by a penny and decreasing
54.4% year over year), on revenues of $37.15 billion (up 0.4%
from the prior year).
Airlines traffic, measured in revenue passenger miles, dropped
3.2% year over year to 47.9 billion. Capacity (or available seat
miles) slid 4.2% year over year to 58.2 billion, while load
factor (percentage of seats filled with passengers) improved 80
basis points year over year to 82.3%.
Consolidated passenger revenue per available seat miles (PRASM or
unit revenue) increased 0.6% year over year, supported by 5.9%
growth in Pacific PRASM, partially offset by decreases of 4.2% in
Latin American PRASM and 0.3% in Atlantic PRASM.
Total operating expenses, excluding special items, rose 2.0% year
over year to $5.6 billion in the reported quarter. Consolidated
unit cost or cost per available seat mile (CASM), excluding fuel,
fourth-party business expense and special items, crept up 5.2%
year over year.
At the end of 2012, the company had $7.0 billion in unrestricted
liquidity, of which $500 million was in revolving credit
In the fourth quarter, United Continental generated operating
cash flow of approximately $31 million and spent approximately
Other Airline Stocks
Delta Air Lines
) reported fourth-quarter 2012 results on Jan 22, with adjusted
earnings of 28 cents coming on par with the Zacks Consensus
Estimate. The results, however, dropped 37.8% from the year-ago
adjusted profit of 45 cents.
Southwest Airlines Co.
) reported fourth quarter 2012 results on Jan 24. The company's
fourth quarter adjusted earnings were 9 cents per share that
slivered past the Zacks Consensus Estimate of 7 cents.
JetBlue Airways Corporation
) will release its financial results on Jan 29.
United Continental currently holds a Zacks Rank #3, implying a
short-term Hold rating. Despite the positives - improving air
travel demand, merger synergies, global network, rising unit
revenue growth, fleet and network optimization and hedging
strategies - that United Continental enjoys, we remain highly
cautious on the stock for the near term.
This is primarily due to concerns over escalating fuel prices,
upward movement of non-fuel expenses, competitive threats,
fluctuations in passenger and cargo demand, unionized workforce
and a sluggish global economy.
DELTA AIR LINES (DAL): Free Stock Analysis
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UNITED CONT HLD (UAL): Free Stock Analysis
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