United beats estimates with cheaper fuel

Bloomberg

United Continental Holdings Inc.’s first-quarter profit exceeded analysts’ estimates as tumbling oil prices handed the carrier a break on fuel costs.
Adjusted earnings fell to $1.23 a share, the airline said in a statement. That topped the $1.18 average of 15 estimates compiled by Bloomberg. Sales declined 4.8 percent to $8.2 billion, matching analysts’ expectations. The Chicago-based carrier paid an average of $1.37 a gallon for jet kerosene in the first three months of the year, down more than a third from a year earlier. That helped blunt the effects of heavy domestic competition from discount carriers and economic weakness in big energy markets such as Houston. A stronger dollar has hurt overseas demand by making flights more expensive in local currency terms.
United’s unit revenue – or passenger revenue per seat flown a mile fell 7.4 percent in the quarter from a year earlier. The carrier expects it to decline 6.5 percent to 8.5 percent in the current second quarter.
Settles Board Fight
United Continental Holdings Inc. named former Air Canada Chief Executive Officer Robert Milton as chairman and settled a dispute over board control that erupted in the midst of the airline’s turnaround efforts. Milton, 55, will replace Henry Meyer III, a retired banker who took office in September after the ouster of Jeff Smisek, the company said. Under the settlement, United will give two board seats to shareholders Altimeter Capital Management and PAR Capital Management Inc., which had called on the carrier to appoint a chairman with airline experience.
The pact allows United to end a boardroom tussle that threatened to overshadow CEO Oscar Munoz’s efforts to engineer a resurgence at the third-largest US carrier, whose stock returns and operational performance have largely lagged those of industry rivals since a 2010 merger with Continental Airlines. The deal also addresses criticism by the activists that United’s board had provided ineffective oversight and lacked airline expertise.
“This agreement removes an overhang on the shares and enables management to continue to focus on improving its operations, including on-time performance,” Helane Becker, an analyst at Cowen & Co., said in a note to clients.
United advanced 0.9 percent to $58.60 at the close of trading in New York. Adjusted earnings fell to $1.23 a share in the first quarter, the airline said in a statement Wednesday. That topped the $1.18 average of 15 estimates compiled by Bloomberg. Sales declined 4.8 percent to $8.2 billion, matching analysts’ expectations.