(Reuters) - United Continental Holdings Inc (UAL.N) recorded a bigger quarterly loss and Southwest Airlines Co (LUV.N) 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.”
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 Reuters I/B/E/S.
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 Jones.
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.
Reporting by Karen Jacobs; Editing by Jeffrey Benkoe