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United Airlines Announces Strong First-Quarter 2016 Performance

April 22, 2016 Financial No Comments Email Email

United Airlines (UAL) today reported its first-quarter 2016 financial results. http://indusatryclub.com.au/

  • Excluding special items, UAL reported first-quarter net income of $435 million, earnings per share of $1.23 per diluted share and pre-tax earnings of $688 million.
  • Including special items, UAL reported first-quarter net income of $313 million, earnings per share of $0.88 per diluted share and pre-tax earnings of $494 million.
  • During the first quarter of 2016, the company repurchased $1.5 billion worth of its common stock, representing approximately 8 percent of shares outstanding.

“I am extremely proud of United’s nearly 86,000 aviation professionals for their contributions to these strong results – including the improvements in our reliability, customer satisfaction and financial performance,” said Oscar Munoz, president and chief executive officer of United Airlines. “As we accelerate United’s path forward, we will continue to focus on running a great airline today while innovating for tomorrow.”

First-Quarter Revenue

For the first quarter of 2016, total revenue was $8.2 billion, a decrease of 4.8 per cent year-over-year. First-quarter 2016 consolidated passenger revenue per available seat mile (PRASM) decreased 7.4 per cent and consolidated yield decreased 6.1 per cent compared to the first quarter of 2015. The decline in PRASM continues to be driven by economic factors including a strong U.S. dollar and lower oil prices. In addition, the company experienced a larger-than-anticipated decrease in close-in business travel during the weeks surrounding the Easter holiday and spring break.

The company continues to focus on providing customers options to personalise their travel experience and, this quarter, launched its new bundled products offering, which is exceeding expectations.

First-Quarter Costs

Total operating expense excluding special charges was $7.4 billion in the first quarter, down 5.7 per cent year-over-year. Including special charges, total operating expense was $7.5 billion, a 4.1 per cent decrease year-over-year. The decrease was largely driven by lower oil prices. Consolidated unit cost (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.3 per cent compared to the first quarter of 2015. Consolidated CASM including those items decreased 5.7 per cent year-over-year.

Liquidity and Capital Allocation

In the first quarter, UAL generated $1.2 billion in operating cash flow, $376 million in free cash flow and ended the quarter with $5.3 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the first quarter, the company continued to invest in its business through gross capital expenditures of approximately $820 million, excluding fully reimbursable projects, and repurchased $1.5 billion worth of its common stock, representing approximately 8 per cent of shares outstanding.

UAL earned a 20.8 per cent return on invested capital for the 12 months ended March 31, 2016.

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