United Airlines is flying high with $140 million profit increase during its fourth quarter. Jeff Smisek CEO and chairman said, “It will take a lot of work to meet financial predictions.” He feels confident about the outcome. According to Smisek,”The right people and plans laid to allow United reach to make good on promises.”
During the fourth quarter, United experienced a reduction in fuel billing, and more customers who flew with them spending more on tickets.
Continental and United have not fully integrated the merger, which came down in 2010. Last November they were making plans to slash the overall budget by $2 million. They run out of two sets of counters and planes. This has not helped in cutting expenses. Until they are better able to combine big-ticket items, the merger is not fully cost reduction friendly.
During, the current quarter United anticipates a rise in revenue. When it did not happen shares dropped.
Net income at United equates to 37 cents a share. The loss cost $1.87 cents per share, or $620 million.
Not counting special charges United would have seen 78 cents a share. FactSet surveyed analysts who predicted a lower amount of 66 cents a share.
Analysts were not expecting revenue to increase to $933 million. They called for no more than seven percent. In the fourth quarter United Airlines, has reason to celebrate flying high with $140 million profit.
Baggage fees, larger seats and added leg space for flights all helped, to increase revenue. The extra fees add up to about $21 a passenger, or 15 percent over standard fees.
Fuel cost dropped to $2.97 billion a 4 percent savings.
United does not expect more than 2 percent growth in this quarter. On Tuesday, the main competitor of United, Delta Airlines reported they plan to see a 4 percent increase.
Analysts forecast a first quarter profit of 27 cents per share for Delta, a 29 cent loss per share for United.
All the major airlines experienced loss with poor weather. United lost $80 million due to canceled flights leaving 6,000 potential customers grounded. As a consultation for the loss, fuel costs dropped with planes unable not fly.
United earned $571 million coming back from loss of 723 million in 2012, revenue of $38.28 million, or 3 percent.
Employees will also be included in the profit-sharing increase. On Feb. 14, they will get a share of the $190 million from the increase earned in 2013.
In efforts to reduce costs, United announced a plan earlier in the month to furlough up to of 700 flight-attendants. The idea did not sit well with the actual 688 flight-attendants who are affected. They would retain employment with Continental through the 2010 merger with United. It would mean losing seniority and being bumped back to new hire status. Loss of seniority for this sector of the airline industry means pay cuts, being last to pick choice routes and schedules, loss of rank for vacation bids and no layoff protection.
If, future openings occur furloughed flight-attendants will be able to return to the United side. While United Airlines is flying high with a profit of $140 million from its fourth quarter, there are still a lot of issues to work out.
By C. Imani Williams