United Continental: These Costs Hurt Q1 Revenue

April 26, 2012

United Continental Holdings (NYSE:UAL) posted a loss of $448 million for the first quarter as it dealt with higher fuel prices and unforeseen costs from its integration of Continental Airlines. The parent of United Airlines said Thursday morning that the loss amounted to $1.36 per share — more than double its loss from the same period last year. Excluding integration costs, United Continental would have lost $286 million, or 87 cents a share. Analysts surveyed by FactSet expected a loss of $1.12 per share.

The integration cost United about $134 million. In February, the airline said revenue was hurt by a switch to a single-computer system for forecasting demand, which resulted in the airline selling more seats at lower fares than it would have otherwise. Then in March, the parent company merged its two frequent flier programs in its switch to a single passenger-information system. That switch caused flight delays for several days.

Finally, to prepare for the switch, United ran fewer and less-full flights. Passenger revenue per available seat mile (PRASM) rose 5.5 percent, a smaller gain than other airlines have been reporting. JetBlue reported an 8 percent increase in PRASM this morning, while beating both profit and revenue estimates.United Continental revenue rose 4.9 percent to $8.6 billion, matching analysts’ forecasts. United said having integrated computer systems should help it improve results for the rest of the year.

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