United Continental Holdings Inc.’s UAL first-quarter 2016 earnings (on an adjusted basis) of $1.23 per share beat the Zacks Consensus Estimate by 6 cents. Earnings, however, declined 19.1% on a year-over-year basis owing to higher taxes which mitigated the positive impact of low fuel costs.
United Continental Holdings Inc. (UAL) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany
Operating revenues of $8,195 million in the first quarter marginally missed the Zacks Consensus Estimate of $8,239 million. Revenues also declined 4.8% on a year-over-year basis. The unfavorable year-over-year comparisons have disappointed investors. Consequently, the stock lost value in after-market trading post the release.
Revenues were hurt by a strong dollar. Passenger revenues declined 5.8% to $6,990 million. Cargo revenues were down 19.8% while other revenues improved 6.9% in the first quarter. During the reported quarter, airline traffic, measured in revenue passenger miles, increased 0.3% year over year on a consolidated basis while capacity (or available seat miles) grew 1.8%, leading to a 120 basis point decline in load factor (percentage of seats filled with passengers) to 79.9%. Consolidated passenger revenue per available seat mile (PRASM or unit revenue) declined 7.4% year over year. Yield on a consolidated basis declined 6.1% from the first quarter of 2015. Average fuel price (on a consolidated basis) per gallon declined 34.1% on a year-over-year basis to $1.37.
Total operating expenses, excluding special items, declined 5.7% year over year. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses and profit sharing, increased 1.3% year over year. Consolidated fuel expense declined over 34% in the reported quarter.
The company expects PRASM (on a consolidated basis) in the first quarter of 2016 to decline in the range of 6.5% to 8.5% in the second quarter. Fuel price (Including all cash-settled hedges) is projected in the band of $1.35 per gallon to $1.40 per gallon for the second quarter of 2016. The company expects pre-tax margin in the second quarter in the band of 13% to 15%. Capacity for the second quarter is projected in the range of +0.5% to -0.5%.
As of Mar 31, 2016, United Continental had $5.3 billion of unrestricted liquidity, which included $1.35 billion of undrawn commitments under its revolving credit facility. The carrier has generated $376 million of free cash flow in the quarter under review. During the quarter, the company bought back approximately $1.5 billion worth of shares.