Flying Higher: United Airlines February Revenues Way Up

(MoneyWatch)  Just as we saw in January, United Airlines (UAUA) found how to make revenue magic in February with an anticipated gain in passenger unit revenues of 17 to 19 percent over February 2009. United actually gave us a little more information to play with than Southwest (LUV) did, as I wrote yesterday, so we can really get more insight into what these numbers mean.

United and its regional affiliates flew 5.3 percent fewer available seat miles in February 2010 vs February 2009. An available seat mile (ASM) is the number of seats times the number of miles each seat flew. It's the basic unit of measure in this industry. So why were there so few ASMs? Well some of it is the continued capacity constraint that airlines have stuck with through the recession. But as United said, more than half that (3.5 points) was due to the winter storms that crushed the Northeast. In United's case, it would be Washington/Dulles that was hit hardest.

As their capacity shrunk, their revenue passenger miles (RPMs) grew 2.1 percent. That's the number of seats with butts in them times the number of miles they flew. So, that's a good thing, but it looks even better because so many flights were canceled. Those people had to be reaccommodated on other flights, at least the ones who didn't just walk away entirely (or couldn't get out of their driveway).

So, more butts plus fewer seats equals better unit revenue performance. In United's case, it was up 17 to 19 percent. Now, 1.5 points of that is related to the storm, so it really should have been 15.5 to 17.5 percent. That's still nothing to sneeze at. In fact, the numbers are up 3.8 to 5.8 percent as compared to February 2008, before air travel completely fell off the cliff.

You might be wondering about ancillary revenues, things like bag fees, change fees, food fees, bathroom fees (not yet), etc. Well that boosted that 3.8 to 5.8 percent number by 2.9 points. So if we back out the 2.9 points from the fees and the storm impact, that means that we're looking at a significantly lower gain. That's a huge difference, and you can see why fees are so important.

I think the general message for February is that there's a lot of noise thanks to the storms, but it's clear that United is really outperforming here.

Photo by Flickr user Telstar Logistics