United Continental Feb Traffic Falls

Zacks

United Continental Holdings Inc.’s (UAL) airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – fell 3.4% year over year to 13.74 billion. Consolidated capacity (or available seat miles/ASMs) for the month was 17.46 billion, down 8.4% from Feb 2012.

The load factor (percentage of seats filled by passengers) improved to 78.7% from 74.6% in Feb 2012. Passenger revenue per available seat mile (:PRASM) is estimated to have increased 6.5–7.5% year over year.

Although United Continental Holdings has gained considerably over the Jan 2013 performance on the back of busy traffic in the Pacific and Latin America, factors like lower business in the Atlantic as well as in the domestic market continued to linger on Feb traffic results. In addition, volatile oil prices, increased competition, increasing maintenance expenses and a disgruntled workforce also remain detrimental factors for the company’s prospects.

Headquartered in Chicago, United Continental operates nearly 5,472 flights every day across 381 airports in 6 continents. With the target to expand its operational wings, United Continental is expanding its global route network. The company is launching various non-stop flights across many international spots. The company announced plans to operate twice-daily nonstop flights between Denver and Dickinson, North Dakota, starting Jun 6, 2013.

Moreover, United Continental is optimizing its network and flight routes for greater efficiency in fleet operations. The company is reducing its domestic fleet count, retiring the older and less-efficient aircraft and reconfiguring domestic aircraft for international service. In 2012, the company suspended services of 19 Boeing (BA) 737-500s, one Boeing 757-200 and three Boeing 767-200s.

United Continental’s various strategic actions including the baggage delivery option, installation of Economy Plus seats and MileagePlus program are expected to give it a competitive edge over other industry players such as Delta Airlines (DAL) and Southwest Airlines Co. (LUV).

United Continental currently retains a Zacks Rank #3 (Hold).

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