United Continental Holdings Inc., the world’s largest carrier, missed third-quarter estimates after profit was pared by both waning demand and higher operating costs.
Earnings excluding some items were $1.35 a share, lagging behind the $1.47 average estimate of 17 analysts in a Bloomberg survey. United Continental reported a 1.3 percent drop in passenger revenue for each seat flown a mile, while fuel expense climbed 1 percent to $3.41 billion. Total passengers decreased 3.2 percent.
The company is trying to improve operations as it integrates its United and Continental units after 28 percent of flights arrived late during the quarter, angering customers during the peak summer travel season. That exacerbated the effects of waning consumer demand amid a slowing economy.
“We overcame tough operational challenges and remain focused on running a reliable airline,” Chief Executive Officer Jeff Smisek said today in a statement.
Including $514 million in special charges, net income fell to $6 million, or 2 cents a share, from $653 million, or $1.69, a year earlier, the Chicago-based company said today in a statement.
Revenue slid 2.6 percent to $9.91 billion, lagging the $9.97 billion average estimate by analysts in a Bloomberg survey. Costs to fly each seat a mile rose 6.6 percent on higher salaries and wages and maintenance expenses.
United fell 1.9 percent to $19.89 at 9:49 a.m. in New York. The stock previously climbed 7.4 percent to $20.27 this year, trailing a 24 percent gain at smaller competitor Delta Air Lines Inc. and a 14 percent advance by the Bloomberg U.S. Airlines Index.
United is working to adjust the size of planes on certain routes to better match demand, such as moving some Boeing Co. 767s from domestic routes to international ones and replacing them with smaller 757s to fly between domestic hubs such as Chicago and Houston.
The company is also trying to get joint labor contracts with most of its unions more than two years after the 2010 merger of United and Continental created the world’s biggest airline. Management reached an agreement in principle with the Air Line Pilots Association negotiators in August, and both sides are working on the contract language.
Editors: James Langford and John Lear. To contact the reporter on this story: Mary Jane Credeur in Atlanta at firstname.lastname@example.org. To contact the editor responsible for this story: Ed Dufner at email@example.com.