United Continental Holdings and its rival US Airways Group on Thursday said their quarterly profits were battered by soaring fuel costs, but travel demand appears to be robust, undeterred by gathering economic threats. The third-quarter results conclude the earnings season on a mostly positive note for major US airlines and reflect a new-found ability to manage capacity, one analyst said.
United Continental's shares fell nearly 2 percent to $19.94 on the New York Stock Exchange after its profit came in below forecasts. US Airways' profit beat forecasts and its shares gained 2.1 percent to $5.78 in morning trading. United Continental, in a regulatory filing on Thursday, said its advance bookings for the next six weeks were up 3.2 percentage points from the same period a year ago on domestic routes and down half of a percentage point on international routes.
The sentiments echo those voiced recently by Delta Air Lines and Southwest Airlines. United Continental, the parent of United Airlines, the world's largest carrier, said its third-quarter net profit fell to $653 million, or $1.69 per share, from $852 million, or $2.16 per share, a year earlier.
Excluding one-time items related to its 2010 merger, the company said it earned $2 per share. That compares with the average Wall Street forecast of $2.08 per share, according to Thomson Reuters I/B/E/S. The company, formed last year from a merger of UAL Corp and United Airlines, reported revenue of $10.2 billion, up 8.7 percent from a year ago. United Continental said its third-quarter fuel expense, excluding the impact of hedges, increased 41.3 percent, or $1.0 billion, year over year.
United Continental ended the quarter with $8.4 billion in unrestricted cash, cash equivalents and short-term investments. The airline flies as two carriers while it integrates operations but said it is on track to get government permission to operate as a single carrier by year's end.
US Airways reported a smaller quarterly net profit, hit by a 44 percent increase in its fuel costs. The carrier said its third-quarter profit was $76 million, or 41 cents per share, compared with $240 million, or $1.22 per share, a year before. Excluding one-time items, the airline earned 51 cents per share. That beats a Wall Street average forecast for a profit of 48 cents per share, according to Thomson Reuters I/B/E/S. The company reported about $19 million of net special items, including costs related to its Delta slot transaction.