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WRAPUP 1-United, Southwest profits top estimates as fuel costs fall
January 23, 2014 / 9:45 PM / in 4 years

WRAPUP 1-United, Southwest profits top estimates as fuel costs fall

* Alaska Air profit also better than expected

* Shares fall amid broader market slowdown

Jan 23 (Reuters) - U.S. airlines United Continental Holdings and Southwest Airlines reported higher-than-expected fourth quarter profit on Thursday, aided by strong revenue and lower fuel costs.

Airline shares fell as the broader market headed lower. Some analysts said a weaker-than-expected revenue forecast from United and profit-taking also pressured the sector.

Chicago-based United said unit revenue, a measure of passenger revenue per available seat mile, would be flat to up 2 percent in the first quarter. The carrier cited January storms and the Easter holiday shift into April this year from March in 2013 as drags on performance.

Delta had forecast a rise of 2 percent to 4 percent and Southwest said its unit revenue for the first period would be higher on a year-over-year basis.

Southwest shares were off 2.4 percent to $21.24 and United fell 1.5 percent to $48.43 in afternoon trading. Alaska Air Group, which also reported a higher profit on Thursday, shed 0.6 percent to $81.35.

Jim Corridore, an analyst with S&P Capital IQ, said concern about United’s revenue outlook weighed on the sector.

The strong fourth-quarter results from Southwest and United, which benefited from fare increases, followed a similar report from Delta earlier this week.

American Airlines Group, the carrier formed by December’s merger of AMR Corp and US Airways, will report results next week.

Most U.S. airlines have bounced back to profitability since 2010, and Corridore said he expected more solid results in 2014.

Carriers “are keeping a tight rein on capacity and are looking to raise fares and price their product to earn a sustained profit,” Corridore said.

United earned $298 million, or 78 cents per share, in the fourth period, as revenue rose 7 percent to $9.3 billion. Analysts expected profit of 65 cents, according to Thomson Reuters I/B/E/S.

Net income at Southwest rose to $212 million, or 30 cents a share, in the fourth quarter, from $78 million, or 11 cents a share, a year earlier. Excluding items, profit was 33 cents, compared with 29 cents expected by analysts. Southwest revenue rose 6 percent to $4.43 billion.

Alaska Air, the parent of Alaska Airlines and Horizon Air Industries, had quarterly earnings of $78 million, or $1.10 a share adjusted for items. That compared with $1.07 expected by analysts on average.

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