Hurricanes Push Down United's 3Q Profit By One-Third
DALLAS (AP) — United Airlines' third-quarter profit fell by one-third as the carrier was rocked by hurricanes that hit its hub in Houston and other airports.
A key revenue measure indicated that United is also paying for a brutal fare war with budget Spirit Airlines, a fight that is expected to drag down average prices again in the fourth quarter.
The third-quarter profit still beat Wall Street expectations.
United said Wednesday it canceled 8,300 flights in the quarter. The bulk of the cancellations came after Hurricane Harvey forced the closure of Houston's largest airport, a major United hub. That was followed by Irma and Maria, which disrupted flights in Florida and the Caribbean. The airline said it flew 46 relief flights after the storms.
The hurricanes accounted for one-third of the reduction in United's pretax income, or about $185 million.
United plans to increase passenger-carrying capacity by 3.5 percent in the fourth quarter, compared with a year earlier, which would be at the high end of an earlier forecast.
Over the summer, investors grew worried that U.S. airlines were growing too fast, pushing fares down. That led to a drop in airline shares, although the stocks have partly recovered recently.
Analysts are expected to question United executives about weak pricing power and the airline's growth plans when the company holds a conference call for investors on Thursday.
United Continental Holdings Inc. said that it earned $637 million, down from $965 million a year earlier.
The Chicago-based airline says that excluding one-time items, it earned $2.22 per share, 6 cents more than the average forecast among 17 analysts surveyed by FactSet and 4 cents better than the expectation of nine analysts polled by Zacks Investment Research.
Revenue was $9.88 billion, equaling the FactSet forecast and slightly higher than the Zacks number.
A key figure, revenue for every seat flown one mile, fell 3.7 percent, reflecting the fare war with Spirit in Denver, Houston and other cities. United predicted that the same figure would decline by between 1 and 3 percent in the fourth quarter.
CEO Oscar Munoz said that despite the challenges, the airline was continuing to "set the stage for United's long-term success."
Shares of United rose 48 cents to close at $67.99 before the third-quarter report. In after-hours trading, they fell 9 cents to $67.90.
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