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BUSINESS A25
Friday 22 January 2016
United’s rising profit still misses and revenue falls
DAVID KOENIG lines for the large number the $9.08 billion average 11 percent. as the top expense. That
AP Airlines Writer of passengers who shop forecast from the FactSet Like other airlines, United too is a pattern being seen
United Airlines’ fourth-quar- mostly by price. analysts. The decline was was helped greatly by at other airlines.
ter profit spiked on cheap- United Continental Hold- caused by lower average plunging oil prices, which United has struggled since
er jet fuel but it still fell short ings Inc. on Thursday re- fares — both United and helped cut its fourth-quar- its 2010 merger with Conti-
of Wall Street expectations. nental Airlines, a deal that
United is in the middle of a Travelers check in at the United Airlines ticket counter at Terminal 1 in O’Hare International Airport briefly made it the world’s
turnaround effort that has in Chicago. United Continental reported quarterly financial results Thursday, Jan. 21, 2016. biggest airline — it has since
included a shake-up of its slipped behind American
top ranks. It has shown im- (AP Photo/Nam Y. Huh) and Delta in passenger
provement in some areas traffic. The airline has been
like on-time performance, ported earnings of $823 Southwest reported that ter fuel bill by 36 percent, a plagued by technology
but revenue is shrinking at million in the fourth quarter, passengers paid 7 percent savings of $912 million from outages and flight delays.
both the main airline and up from $28 million a year less per mile than in late the year before. In September, CEO Jeff
the United Express division. ago. 2014. Labor costs rose nearly 8 Smisek left as a result of
Still, with jet fuel prices tum- Excluding one-time items, Revenue fell 3 percent on percent and eclipsed fuel company and government
bling, airlines are making the company earned $2.54 so-called mainline United investigations into dealings
more money even while per share, a nickel short of flights, 9 percent on United with the agency that oper-
charging lower average expectations by industry Express, and 11 percent for ates the airport in Newark,
fares. analysts according to polls cargo. Only “other” reve- New Jersey, a United hub.
The airlines are raising pay by both Zacks Investment nue — things like bag fees, His replacement, Oscar
for employees and buying Research and FactSet. ticketing fees, and money Munoz, suffered a heart at-
new planes. United an- Revenue fell 3 percent to from the MileagePlus loy- tack after six weeks on the
nounced Thursday that it $9.04 billion, slightly below alty program — grew; up job and had a heart trans-
will buy 40 new Boeing 737- plant two weeks ago. Gen-
700 jets that will enter the eral counsel Brett Hart has
fleet starting in mid-2017. been the acting CEO.
Those planes will replace During a conference call
smaller planes used by re- with analysts Thursday, Mu-
gional airlines that operate noz said “I feel great” and
United Express flights. said that he expects to re-
United also announced turn by the end of March.
that later this year it will be- Under Munoz and now Hart,
gin selling new “entry-lev- the company has been re-
el” fares for the most cost- viewing its operations from
conscious passengers. Del- the boarding process to
ta has a “basic economy” the coffee served in flight.
ticket that doesn’t allow
changes or let passengers
pick their seat. American
has said it will introduce a
no-frills fare this year.
The big airlines are trying
to compete with discount
carriers such as Spirit Air-
Southwest’s’ 4Q profit soars on cheap fuel
DAVID KOENIG ing costs was 90 cents per ton, the average flight was
AP Airlines Writer share, matching the ex- 84.1 percent full, up from 82
DALLAS (AP) — Southwest pectations of analysts sur- percent a year earlier.
Airlines Co. earned a re- veyed by Zacks Investment Like other airlines, South-
cord fourth-quarter profit Research and FactSet. The west benefited greatly from
of $536 million as fuel costs net income of $536 million plunging oil prices. The na-
fell by nearly one-third and compared with $190 mil- tion’s fourth-biggest airline
offset lower fares and rising lion in the fourth quarter of cut its fuel bill by $369 mil-
labor costs. 2014. lion, or 32 percent. South-
Net income nearly tripled Revenue rose more than 7 west expects the savings
from a year ago. percent to $4.98 billion, just to extend into 2016. It fore-
Chairman and CEO Gary below the FactSet analysts’ cast that it will spend $1.70
Kelly said travel demand in forecast of $4.99 billion. per gallon on fuel in the first
2016 continues to be strong Passengers flew 11 percent quarter, compared with $2
but at weaker average more miles, which helped a gallon in the same quar-
fares. offset a 5 percent decline in ter of 2015.
With all the cash it is gen- the average one-way fare, Investors may turn their fo-
erating, the airline plans to to $149.94 from $158.06 a cus to labor costs, where
buy back even more stock. year earlier. Southwest reported a 19
Its shares edged up in pre- There weren’t many empty percent increase in the
market trading. seats. Even with Southwest’s fourth quarter, making sal-
Southwest said Thursday aggressive expansion, es- aries and benefits the air-
that profit excluding one- pecially in Dallas and new line’s top expense, bigger
time items like fuel-hedg- international flights in Hous- than fuel.
