United Continental posts lower profit, revenue
(Reuters) - United Continental Holdings Inc (UAL.N), the world's biggest airline, reported a lower-than-expected quarterly profit on Thursday as revenue fell and expenses rose.
United "clearly had a bad quarter operationally," said Avondale Partners airline analyst Fred Lowrance.
The company, formed when United bought Continental Airlines in 2010, shifted to a single reservations system and implemented other new processes this year, hurting customer service and operating measures such as on-time arrivals and mishandled baggage rates.
But Lowrance said on-time performance had improved in August and September from July. "It would seem that they've fixed" the problems, he said.
Net income came to $6 million, or 2 cents a share, in the third quarter, down from $653 million, or $1.69 a share, a year earlier.
The latest quarter included a charge of $454 million for an agreement in principle on a new labor contract with the carrier's pilots union and $60 million in merger integration costs.
Excluding these and other items, the profit was $1.35 a share. Analysts on average had expected $1.47, according to Thomson Reuters I/B/E/S.
Revenue fell 2.6 percent to $9.91 billion, just shy of the $9.97 billion expected by analysts. Unit revenue, an important measure that refers to passenger revenue per available seat mile, fell 1.3 percent.
Operating costs rose 5 percent, with fuel expenses up 1 percent.
United has been taking a number of steps to improve, including upgrading the seating in its economy-, first- and business-class cabins, and offering new menu choices on international flights.
The airline recently took delivery of its first Boeing (BA.N) 787 Dreamliner plane, and this summer it ordered 150 Boeing 737s to replace older, less-efficient jets.
United Continental was the last of the major U.S. carriers to report third-quarter results. Delta Air Lines (DAL.N) and US Airways (LCC.N) posted higher earnings earlier this week and said revenue trends looked to be improving after a soft September.
Shares of United Continental were down 2.5 percent at $19.76 in morning trading.
(Reporting by Karen Jacobs in Atlanta; Editing by Gerald E. McCormick and Lisa Von Ahn)
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