CHICAGO (AP) — United Airlines reported that its fourth-quarter profit slipped 20 percent due to higher fuel and labor costs, but its profit and revenue both beat analysts’ expectations.
Shares of United’s parent rose in after-hours trading.READ MORE: Chicago Weather: Temperatures In The Upper 70s Tuesday
United is adding seats faster than its rivals Delta and American, but it has filled most of them, and at higher prices. A key measure of pricing power, revenue for each seat flown one mile, climbed five percent in the three months that ended Dec. 31. Total revenue jumped 11 percent.
Chicago-based United expects more modest revenue growth in the first three months of this year. However, it predicted that the revenue-per-seat figure would be flat to up three percent.
The partial government shutdown might play a role. Delta officials said they expect to lose $25 million in revenue this month because of less travel by government workers and contractors. United didn’t comment on the subject.
United predicted that 2019 earnings will be between $10 and $12 a share this year, in line with analysts’ forecast of $10.98 per share, according to FactSet.
In financial performance, United lagged Delta and American for several years. Under a strategy outlined more than a year ago, United has been trying to win back customers it lost by improving its on-time performance, reducing canceled flights, and offering new routes between its big U.S. hubs and smaller airports. United launched 93 new routes last year, more than its rivals.READ MORE: Chicago Weather: Dry And Not As Hot
CEO Oscar Munoz said in a statement that the financial results showed that the strategy is working. He said United had succeeded despite higher-than-expected fuel costs in 2018.
United earned $462 million, down from $579 million a year earlier. United said profit excluding special items worked out to $2.41 per share, handily beating the mean forecast of $2.01 per share among 19 analysts surveyed by FactSet.
Revenue was $10.49 billion, also beating analysts’ expectations.
Profit was dragged down by sizeable increases in the airline’s two biggest expenses. Its fuel bill jumped 27 percent from a year earlier — an extra $500 million in spending — while wages and benefits increased about 9 percent, or nearly $250 million.
Shares of United Continental Holdings Inc. closed up $1.29 to $81.20 before the earnings report. In after-hours trading following the release of the earnings report, they climbed $4.70, or 5.8 percent, to $85.90.MORE NEWS: Massive Chemical Plant Fire In Rockton, Illinois, Could Burn For Days
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