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Jan Traffic Dips for United Continental

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United Continental Holdings Inc.’s (UAL - Free Report) Jan 2014 airline traffic – measured in revenue passenger miles or RPMs, which imply revenue generated per mile per passenger – decreased 1.6% year over year to 15.23 billion. Consolidated capacity (or available seat miles/ASMs) for the month was 18.82 billion, down 2.8% from Jan 2013.

The load factor (percentage of seats filled by passengers) improved to 80.9% from 79.9% in the same month, last year. The company registered a completion factor of 95.7%, with nearly 71.1% of flights on schedule.

The harsh winter storms forced the carrier to cancel more than 1,000 flights during the month, which reduced its consolidated capacity. However, lower capacity as compared to traffic led to a higher occupancy rate for the month.

The airline behemoth chalked out plans to overhaul its finances as it underperformed its domestic peers in recent times. The passenger airline plans to reduce its annual costs by $2 billion by cutting fuel and sourcing costs, improving maintenance, and optimizing distribution channels.

Additionally, the Chicago-based carrier is also making solid progress in expanding its on-board products and services in both domestic and international fleet to perk up its ancillary revenue contributions.

Apart from that, expansion of its global and domestic route network with the introduction of non-stop flights and continuous investments to upgrade its fleet by scraping the older aircraft for new fuel efficient ones will drive its bottom line going forward. We thus remain bullish on the company despite the weak operational results.

United Continental carries a Zacks Rank #1 (Strong Buy). Other stocks worth considering within this sector are Southwest Airlines Co. (LUV - Free Report) , JetBlue Airways Corp. (JBLU - Free Report) and Copa Holdings SA (CPA - Free Report) . Southwest carries a Zacks Rank #1 while JetBlue and Copa carry a Zacks Rank of #2 (Buy).

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