Flight cancellations along with a late Easter are expected to
United Continental Holdings Inc.
) first quarter 2014 results. While the carrier is recovering
from a severe winter in the U.S., the news hit the stock hard as
it fell 3.33% on the Friday trade on NYSE.
The Chicago-based carrier announced that it had to cancel more
than 22,500 flights in the first couple of months in 2014, which
is nearly four times the flight cancellation during same period
last year. The company specified that regional subsidiary United
Express was the most affected, with almost 20,000
The premier passenger carrier now expects first quarter
revenue passenger mile to decrease somewhere between 0.5% and
2.5% on an annualized basis in the first quarter, quite less than
previous expectation of up to 2% growth. The carrier also expects
consolidated PRASM (passenger revenue per available seat mile) to
go down by 1.5%.
Apart from its home ground Chicago, the other hubs that
experienced flight disruptions, were Denver and Newark, New
Jersey. We believe that it will be difficult now for the company
to repeat its performance last quarter, when it beat the Zacks
Consensus Estimate by a wide margin.
However, United Continental is not the only carrier to have
been affected by the freezing winter. Since Dec 2013, nearly
80,000 U.S. flights have been cancelled so far − the maximum
number during a winter season in the last 20 years.
Delta Airline Inc.
American Airlines Group Inc.
) are also expected to feel the chill of the sub-zero temperature
JetBlue Airways Corp.
) expects revenues and operating income to be hurt during the
Amid these negatives, the carrier received a tentative
approval from The U.S. Department of Transportation to operate a
flight between San Francisco and Tokyo's Haneda Airport, citing
that it will improve choices for passengers.
Thus, despite the short-term concerns we remain bullish about
the company's long-term prospects based on its ongoing
cost-cutting initiatives and network expansion. United
Continental currently carries a Zacks Rank #1 (Strong Buy).
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