* United adjusted loss 58 cts/shr vs view loss 61 cents
* Southwest adjusted profit 9 cents vs estimate 8 cents
By Karen Jacobs
Jan 24 United Continental Holdings Inc
recorded a bigger quarterly loss and Southwest Airlines Co
posted lower profit on Thursday, but results topped
expectations and the carriers said current bookings were solid.
Shares of both carriers were up in afternoon trading.
Southwest said bookings for the remainder of the current
quarter were "strong" so far, while United said the percentage
of available seats sold for the next six weeks was running
higher for domestic, international and regional segments.
"Business for us has been good," Southwest Chief Executive
Gary Kelly told analysts on a conference call. He said the
carrier had seen no signs of weakening consumer sentiment.
In the fourth quarter, higher overall costs hurt both United
Continental and Southwest, even as fuel expenses moderated.
United, which angered fliers after technology glitches sparked
massive delays last year, also recorded big charges.
"Our operations are running smoothly ... and our customer
satisfaction scores are climbing," United Chief Executive Jeff
Smisek said on a conference call.
United said it planned to slash more than 600 management and
administrative positions to cut costs and will begin customer
service training to win back customers who defected following
its 2010 merger with Continental that included converting to a
new computer reservation system.
United, the world's largest carrier, said its quarterly net
loss widened to $620 million, or $1.87 a share, from $138
million, or 42 cents a share, a year earlier.
It took charges of $430 million in the latest quarter, with
much of that tied to paying off pension obligations and costs
for systems integration and training.
Excluding items, United's quarterly loss was 58 cents a
share, better than the 61 cent loss expected by analysts, on
average, according to Thomson Reuters I/B/E/S.
Revenue fell 2.5 percent to $8.7 billion. Operating costs
rose 3.2 percent. While fuel expenses edged down 0.3 percent,
salaries and maintenance materials were higher by 4 percent and
9.2 percent, respectively.
"These large mergers tend to create a lot of headaches,"
said Matthew Jacob, an airline analyst with ITG Investment.
"Maybe the efficiencies will take a little bit more time to
develop as they try to combine these two large companies and
operate them together."
SOUTHWEST PROFIT FALLS
At Southwest, the traditional low-fare leader that acquired
AirTran in 2011, net income fell 49 percent to $78 million, or
11 cents a share, in the fourth quarter, from $152 million, or
20 cents, a year earlier.
Excluding items, profit was 9 cents a share, compared with
the average analyst estimate of 8 cents, according to Thomson
Revenue rose 1.6 percent to $4.17 billion. Operating
expenses were up 3 percent, with wages and salaries up 4.5
percent. Fuel and oil costs increased 0.7 percent.
"Costs continue to increase but what we see at Southwest is
a strong ability, especially over the past few quarters, to keep
costs controlled," said Logan Purk, an analyst with Edward
Southwest, which faces labor cost pressures as competition
heats up not only with older airlines but newer low-cost
carriers, is counting on new fees this year to help raise
revenues by $1.1 billion and boost earnings.
The airline, which allows passengers to check up to two bags
for free, is boosting fees on additional bags and on overweight
luggage. Bag fees are rising at AirTran.
United Continental shares were up 1.5 percent to $25.37 in
afternoon trading and Southwest gained 0.7 percent to $11.44.