United Continental Beats Q2 Earnings, PRASM Woes Stay - Analyst Blog
United Continental Holdings Inc. UAL posted adjusted earnings of $3.31 per share in the second quarter of 2015, ahead of the Zacks Consensus Estimate of $3.29. Earnings were up 41.5% on a year-over-year basis. The bottom line was aided by low fuel costs. The earnings beat pleased investors. Consequently, the stock gained in early trading.
United Continental Holdings Inc. - Earnings Surprise | FindTheBest
Operating revenues of $9.9 billion fell short of the Zacks Consensus Estimate of $10.02 billion. Revenues also declined 4% on a year-over-year basis. Passenger revenues declined 3.4% to $8.68 billion. Cargo revenues and other revenues declined 1.3% and 9.6%, respectively, in the second quarter of 2015.
During the reported quarter, airline traffic, measured in revenue passenger miles, increased a mere 0.7% year over year while capacity (or available seat miles) grew 2.3%, leading to a 140 basis point decline in load factor (percentage of seats filled with passengers) to 83.9%. Consolidated passenger revenue per available seat miles (PRASM or unit revenue) declined 5.6% year over year. Yield on a consolidated basis declined 4.1% compared with the second quarter of 2014.
Total operating expenses, excluding special items, declined 9.1% year over year. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses and special items, increased 0.3% year over year to 9.34 cents. Aircraft fuel expense declined over 32% to $2.1 billion.
As of Jun 30, 2015, United Continental had $6.3 billion of unrestricted liquidity, out of which $1.35 billion was invested in revolving credit facilities. The carrier has generated $474 million of free cash flow in the quarter under review. Driven by the company’s solid financial health, the board of directors authorized a new share buyback plan worth $3 billion. The scheme is expected to be completed by Dec 31, 2017.
Outlook
The company stated that consolidated PRASM is expected to decline in the range of 5% to 7% in the third quarter. Capacity for 2015 is expected to grow in the range of 1% to 1.5%.
Upcoming Releases
Other major carriers like American Airlines Group AAL and Spirit Airlines SAVE are slated to unveil their second quarter financial numbers on Jul 24.
Zacks Rank
Currently, United Continental has a Zacks Rank #3 (Hold). A better-ranked stock in the airline space is Alaska Air Group ALK with a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
UNITED CONT HLD (UAL): Free Stock Analysis Report
SPIRIT AIRLINES (SAVE): Free Stock Analysis Report
AMER AIRLINES (AAL): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
