United Continental Holdings Inc. (UAL), the parent company of United Airlines, reported a marginal increase in its Dec 2014 traffic. Results were hurt by weak domestic traffic data. Consolidated airline traffic (measured in revenue passenger miles or RPMs), which implies revenue generated per mile per passenger, inched up 0.1% year over year to 16.9 billion. Domestic traffic declined 3.3%, while international travel climbed 4.1%.
Consolidated capacity (or available seat miles/ASMs) for the month was 20.2 billion, up 2.3% from Dec 2013. The load factor (percentage of seats filled by passengers) deteriorated to 83.5% from 85.4% in the same month last year. The company registered a completion factor of 99.2%, with nearly 76.2% of flights on schedule.
During 2014, United Continental generated RPMs of 205.6 billion (up 0.2% year over year) and ASMs of 246 billion (up 0.3% year over year), leading to a load factor of 83% (up 150 basis points).
Apart from the traffic data, United Continental also provided an investor update. The company stated that preliminary passenger revenue per available seat mile (PRASM) for the final quarter of 2014 climbed in the band of 0.25%–0.75% on a year-over-year basis.
The carrier also stated that it has spent approximately $2.83 per gallon on jet fuel in the final quarter of the year. This includes 25 cents per gallon of cash-settled hedge losses.
For 2014, preliminary PRASM increased in the range of 1.6%-1.7% compared to 2013. Cargo revenues are expected in the band of $928–$948 million while other revenues are projected in the range of $4.19–$4.21 billion.
Incidentally, United Continental’s Dec 2014 numbers lag rival Delta Air Lines Inc.'s (DAL) comparable results. Delta’s traffic was up more than 2.1% in December. Delta projects a spending of $2.59–$2.64 (on an adjusted basis) per gallon on jet fuel in the final quarter of the year.
Zacks Rank
United Continental currently carries a Zacks Rank #1 (Strong Buy). Equally well-ranked stocks in the airline space are American Airlines Group Inc. (AAL) and Southwest Airlines (LUV).
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