United Traffic Remains Slow in Mar

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 1.2% year over year to 17.33 billion in Mar 2013. Consolidated capacity (or available seat miles/ASMs) for the month was 20.54 billion, down 4.6% from Mar 2012.

The load factor (percentage of seats filled by passengers) improved to 84.4% from 81.5% in Mar 2012. Passenger revenue per available seat mile (:PRASM) is estimated to have increased 6.5–7.5% year over year. The company registered a completion factor of 98.7%, with nearly 80.7% of the flights on schedule.

For the first three months of this year, United Continental generated RPMs of 46.54 billion (down 1.2% year over year) and ASMs of 57.37 billion (down 4.9% year over year). Load factor was 81.1%, reflecting a decline of 300 basis points.

Although United Continental Holdings’ results improved considerably from Feb 2013 on the back of busy traffic in the Pacific and Latin America, weak business performance in the Atlantic as well as in the domestic market negated the positive effects. In addition, volatile oil prices, stiffer competition, increasing maintenance expenses and a disgruntled workforce also remain detrimental to the company’s prospects.

Chicago-based United Continental aims to commence operations of The Boeing Company’s (BA) 787 Dreamliner on May 31, ahead of the scheduled date in June. The aircraft will fly from Houston to Denver.

The company – which owns six Boeing 787s – had, earlier, grounded the jets on issues of technical failure. Last week, Boeing, executed necessary tests for the Dreamliner battery system and will submit the reports to the U.S. Federal Aviation Administration (FAA). United Continental remains hopeful of receiving approvals from the FAA for the aircraft takeoff before May.

United Continental – that operates other industry players such as Delta Airlines (DAL) and Southwest Airlines Co. (LUV) – currently retains a Zacks Rank #3 (Hold).
 

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