United Posts a Loss as Two Rivals Report Record First Quarters

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Chicago (TheStreet) -- United   reported a loss in a quarter when its two principal rivals reported record profit. United said severe winter weather was only partially to blame.

Excluding items, the carrier lost $489 million, or $1.33 a share. Analysts surveyed by Thomson Reuters had estimated a loss of $1.35. Revenue fell 0.3% to $8.7 billion, in line with estimates.

Severe winter weather widened the first quarter loss by approximately $200 million, United said, as the carrier's mainline on-time arrival rate was 74.3%.

Including $120 million in special items, the first-quarter loss was $609 million, or $1.66 a share.

"This quarter's financial performance is well below what we can and should achieve. We are taking the appropriate steps with our operations, network, service and product to deliver significantly better financial results," said CEO Jeff Smisek in a prepared statement. "The entire United team is sharply focused on accomplishing the goals we have laid out for long-term financial success."

In a note, Cowen and Co. analyst Helane Becker wrote, "United continues to frustrate us (and investors) with their inability to match the PRASM results of Delta  (and the industry for that matter). We continue to believe that United as significant PRASM potential, but it appears the company has done little to achieve it." American  and Delta both reported record first-quarter results.

Becker noted that United is forecasting current quarter PRASM growth of 1% to 3%, compared to her estimate of up to 3.2%.

During the quarter, United's consolidated passenger revenue per available seat mile fell 2%. Winter-related cancellations accounted for 1.5 points of the decline. Consolidated passenger revenue fell 2.3% to $7.4 billion, while ancillary revenue gained 7.6% to more than $21 per passenger. Domestic PRASM rose 1.4%, but PRASM declined in every international region, with Pacific PRASM showing the biggest dip at 6.3%.

"We recognize that we have lagged on revenue and are taking the necessary actions to remedy that," said Jim Compton, chief revenue officer, in a prepared statement.

On the cost side, cost per available seat mile excluding fuel and special items increased 3.1% on a consolidated capacity reduction of 0.3%. Overall CASM gained 1%.

"We are making good progress in reducing costs and delivering sustainable efficiencies, all while improving the product for our customers," said Chief Financial Officer John Rainey. "While we are not pleased with our first-quarter financial results, we are building a strong foundation that will result in improved financial performance."

United ended the first quarter with $6 billion in unrestricted liquidity, including $1 billion of undrawn commitments under a revolving credit facility.

Written by Ted Reed in Charlotte, N.C.

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