By Nivedita Bhattacharjee
CHICAGO Oct 24 United Continental Holdings Inc
, which owns United Airlines, missed quarterly profit
estimates on Thursday as the airline still struggled to
consolidate itself nearly three years after a merger that
created the world's biggest airline.
Analysts said the carrier is lagging the industry on
important performance points. Despite a handful of airlines yet
to report, it appears that United's margin gap to the industry
widened by 420 basis points from last year, J.P. Morgan analyst
Jamie Baker said in a note to clients.
Shares of the Chicago-based airline fell as much as 4
percent in early trading before reversing and trading up 1.5
percent at $31.43 on the New York Stock Exchange.
"Perhaps the market's forgiveness of United is driven by
confidence that management, at some point, will come out
swinging with an aggressive plan of action, margin restoration,
and corporate share recapture," Baker said in a note before the
company hosted its conference call.
For the third quarter, the Chicago-based company earned $379
million, or 98 cents a share, up from $6 million, or 2 cents a
share, a year earlier.
However, after excluding $211 million of merger related
charges, the company earned $1.51 a share, missing Wall Street
estimates by 3 cents, according to Thomson Reuters I/B/E/S.
Revenue came in at $10.23 billion. A year before, revenue
was $9.91 billion.
United's consolidated revenue passenger miles decreased 0.3
percent, and capacity decreased 1.1 percent.
Passenger revenue per available seat mile, a key measure of
airline health, rose 2.7 percent. Delta said on Tuesday
that its comparable number rose 4 percent. Southwest Airlines
said on Thursday that quarterly profit rose as fuel
costs fell and higher airfares bolstered revenue.
On a conference call with analysts, Chief Executive Jeff
Smisek called the results "unsatisfactory."
Hurting results was a demand forecast in its revenue
management system, which accepted too many low-yield bookings
early in the booking curve. The company is also seeing increased
competitive pressure in the Pacific region, particularly in
China, he said. Pacific revenue declined 9.4 percent.
"Long-term we continue to like the company, however
we believe the absolute short-term will not be pretty," said
analyst Helane Becker of Cowen and Co.
United, formed by a merger of UAL and Continental in 2010,
has been working to win back customers who turned to rivals
after the airline faced severe service-related and operational
problems last year.
In August, United was fined $350,000 by the U.S. Department
of Transportation for failing to make prompt refunds to
consumers. The department also said the airline underreported
the number of mishandled baggage reports it received from
passengers between January and October 2011.