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United Continental Beats Q3 Earnings, PRASM Woes Stay

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United Continental Holdings Inc.UAL posted adjusted earnings of $4.53 per share in the third quarter of 2015, beating the Zacks Consensus Estimate of $4.49. Earnings were also up substantially on a year-over-year basis. The bottom line was aided by low fuel costs.

United Continental Holdings Inc. - Earnings Surprise | FindTheBest

On the other hand, operating revenues of $10.31 billion fell short of the Zacks Consensus Estimate of $10.27 billion and declined 2.4% on a year-over-year basis. Passenger revenues declined 3.8% to $8.96 billion. Cargo revenues were down 0.8% while other revenues improved 9.8% in the third quarter.

During the reported quarter, airline traffic, measured in revenue passenger miles, increased 2% year over year on a consolidated basis while capacity (or available seat miles) grew 2.1%, leading to a 20 basis point decline in load factor (percentage of seats filled with passengers) to 85.6%. Consolidated passenger revenue per available seat mile (PRASM or unit revenue) declined 5.8% year over year. Yield on a consolidated basis declined 5.6% compared with the third quarter of 2014.

Total operating expenses, excluding special items, declined 10.7% year over year. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses and special items; increased 1% year over year to 9.48 cents. Aircraft fuel expense declined over 38% in the reported quarter. Fuel price (economic) per gallon in the third quarter of 2015 was $1.97. The comparable figure was $3.01 per gallon a year-ago.

The company expects PRASM in the fourth quarter to decline in the range of 4% to 6%. Fuel price (Including all cash-settled hedges) is expected in the band of $1.85 to $1.90 per gallon in the final quarter of 2015.

As of Sep 30, 2015, United Continental had $6.9 billion of unrestricted liquidity, which included $1.35 billion of undrawn commitments under its revolving credit facility. The carrier has generated $627 million of free cash flow in the quarter under review. During the quarter, the company returned $262 million to shareholders through buybacks.

Zacks Rank

Currently, United Continental has a Zacks Rank #2 (Buy). Investors interested in the airline space may also consider Ryanair Holdings RYAAY , SkyWest Inc. SKYW and Virgin America VA , all of which sport a Zacks Rank #1 (Strong Buy).

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UNITED CONT HLD (UAL): Free Stock Analysis Report

RYANAIR HLDGS (RYAAY): Free Stock Analysis Report

SKYWEST INC (SKYW): Free Stock Analysis Report

VIRGIN AMERICA (VA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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