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United Continental November Traffic and Load Factor Rise
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Chicago-based United Continental Holdings, Inc. (UAL - Free Report) , the parent company of United Airlines, reported impressive traffic numbers for the month of November. The company recorded an increase in load factor (percentage of seats filled by passengers) as traffic growth outpaced capacity expansion.
We note that the company has been performing well over the past few months and has comfortably surpassed the Zacks categorized Transportation-Airline industry over the last three months. The stock has gained over 36.02% compared with the industry, which has advanced just 18.90% over the same period.
Traffic
Traffic – measured in revenue passenger miles (RPMs) – was 16.19 billion, up 1.7% from 15.92 billion recorded a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 1.6% to 19.80 billion. Load factor, on the other hand, increased to 81.8% from 81.7% a year ago.
At the end of the first eleven months of 2016, the carrier recorded 0.7% increase in RPMs to 192.71 billion, while ASMs grew 1.3% to 232.41 billion, both on a year-over-year basis. Load factor contracted 60 basis points to 82.9% in the period as capacity growth outpaced traffic expansion.
The company posted an On-time performance of 71.4% and a completion factor of 99.2% for November. Notably, the company had the lowest ever cancellations in November. United Continental recorded the best consolidated Thanksgiving on-time performance in its history this year.
November traffic results have been good for airline carriers, such as Alaska Air Group Inc. (ALK - Free Report) , Delta Air Lines Inc. (DAL - Free Report) and Southwest Airlines Co. (LUV - Free Report) .
Fourth-Quarter Guidance
United Continental revised its guidance for the fourth quarter. Consolidated passenger unit revenues are expected to decline in the range of 3% to 4% from 2015 compared with an earlier issued guidance of a decline of 4% to 6% due to better-than-expected bookings in the second half of this quarter.
The company also expects cost per ASM (CASM) to increase by 0.5 points after the ratified contract for technicians and related employees on Dec 5, 2016. CASM is now expected to increase in the range of 4% to 4.5% compared with the same period in 2015. The earlier issued guidance was of an increase of 4.75–5.75% and the improved guidance is based on lower-than-expected expenses from certain benefits. Pre-tax margin for the period is expected in the range of 7.5% to 8.5% compared with earlier guidance of 5–7%.
We are positive on the improvement in the company’s fourth quarter guidance and expect the company to continue its trend of strong operational performance in light of the new contract.
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United Continental November Traffic and Load Factor Rise
Chicago-based United Continental Holdings, Inc. (UAL - Free Report) , the parent company of United Airlines, reported impressive traffic numbers for the month of November. The company recorded an increase in load factor (percentage of seats filled by passengers) as traffic growth outpaced capacity expansion.
We note that the company has been performing well over the past few months and has comfortably surpassed the Zacks categorized Transportation-Airline industry over the last three months. The stock has gained over 36.02% compared with the industry, which has advanced just 18.90% over the same period.
Traffic
Traffic – measured in revenue passenger miles (RPMs) – was 16.19 billion, up 1.7% from 15.92 billion recorded a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 1.6% to 19.80 billion. Load factor, on the other hand, increased to 81.8% from 81.7% a year ago.
At the end of the first eleven months of 2016, the carrier recorded 0.7% increase in RPMs to 192.71 billion, while ASMs grew 1.3% to 232.41 billion, both on a year-over-year basis. Load factor contracted 60 basis points to 82.9% in the period as capacity growth outpaced traffic expansion.
The company posted an On-time performance of 71.4% and a completion factor of 99.2% for November. Notably, the company had the lowest ever cancellations in November. United Continental recorded the best consolidated Thanksgiving on-time performance in its history this year.
November traffic results have been good for airline carriers, such as Alaska Air Group Inc. (ALK - Free Report) , Delta Air Lines Inc. (DAL - Free Report) and Southwest Airlines Co. (LUV - Free Report) .
Fourth-Quarter Guidance
United Continental revised its guidance for the fourth quarter. Consolidated passenger unit revenues are expected to decline in the range of 3% to 4% from 2015 compared with an earlier issued guidance of a decline of 4% to 6% due to better-than-expected bookings in the second half of this quarter.
The company also expects cost per ASM (CASM) to increase by 0.5 points after the ratified contract for technicians and related employees on Dec 5, 2016. CASM is now expected to increase in the range of 4% to 4.5% compared with the same period in 2015. The earlier issued guidance was of an increase of 4.75–5.75% and the improved guidance is based on lower-than-expected expenses from certain benefits. Pre-tax margin for the period is expected in the range of 7.5% to 8.5% compared with earlier guidance of 5–7%.
We are positive on the improvement in the company’s fourth quarter guidance and expect the company to continue its trend of strong operational performance in light of the new contract.
The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free>>