United Continental Reports Smaller Loss than Estimates
A loss that beats estimate of analysts was reported by United Continental Holdings Inc. This lesser loss was reportedly boosted by higher fares. It amounted to $136 million which does not include other items.
An increase of 41 percent was challenged by the airlines in prices for jet fuel with six increases in its fares. These fares covered much of the high prices for fuel. The airlines gained a rise in revenue of 10.8% compared to last year’s performance.
Jeff Smisek, chief executive officer (CEO) of United Continental, mentioned that it is his aim to increase fares to cover higher costs of fuel.
For the year, the airline also declined its plan that has something to do with growth enhancement. As a first quarter flying capacity was added, the airline stressed that it would cut 1% to its flying capacity in May. In September, it will then reduce flying by 4% points. Its CEO cited that the airline is likely to make more reductions in its capacity if necessary.
United, formed by the merger of Continental Airlines Inc. and UAL Corp., emphasized that its fine-tuned loss did not include the cost of $77 million. Gains in hedging cut the fuel of costs of United Continental by $154 million. It’s likely for airlines to utilize financial contracts that earn in value amid rise in oil prices to separate them from price spikes. About 46% of the company’s fuel has been hedged by United for the remainder of the year to minimize costs of fuel. According to Smisek, United and Continental are capable of absorbing high prices in fuel as consolidated airline.
The company’s quarterly loss was 65% per share, loss of 41 cents per share before adding the merger expense of 24 cents per share – whereas survey by FactSet predicted a loss of 48 cents per share.
The airline mentioned its expectation to take Boeing Co.’s delivery of some 787 in 2012. It is going to be the first customer for the plane that is described as more fuel-efficient. Boeing has emphasized its delivery of the first plane to All Nippon Airways of Japan in the third quarter.
Deliveries of these Boeing planes, which are in test flights, have been hindered by delays due to problems related to materials and construction.
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