United Continental Q4 Fails to Take Off

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When United Continental Holdings Inc. (NYSE: UAL) released its most recent quarterly results late Tuesday, the company posted $1.40 in earnings per share (EPS) and $9.4 billion in revenue. That compared with consensus estimates from Thomson Reuters of $1.31 in EPS on revenue of $9.42 billion. In the fourth quarter of last year, United said it had EPS of $1.78 and $9.0 in revenue.

During the most recent quarter, consolidated unit cost per available seat mile (CASM) increased 4.0% from last year due largely to higher fuel and labor expense. Fourth-quarter consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.5% year over year, driven mainly by higher labor expense.

Consolidated passenger revenue per available seat mile (PRASM) was up 0.2% compared to the fourth quarter of 2016. Cargo revenue was $304 million in the fourth quarter, an increase of 21.6% year over year, primarily due to higher international freight volume and yields.

Previously, the company’s board of directors authorized a new $3 billion share repurchase program in December.

In terms of the outlook, United expects to see its capacity growth in the range of 4% to 6% over the next three years.

Consensus estimates call for $7.00 in EPS and $39.78 billion in revenue for the 2018 full year.

Oscar Munoz, CEO of United, commented:

I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance. Reliability is an important pillar in our continued focus on further improving the customer experience. Looking ahead, we are committed to improving profitability over the long-term by building on the strong foundation we have laid over the past two years. Everyone at United is excited to enter 2018 with a clear set of priorities and a renewed sense of purpose around unlocking the full potential of United Airlines.

Shares of United traded down about 10% Wednesday morning to $70.18, with a consensus analyst price target of $78.88 and a 52-week range of $56.51 to $83.04.