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United Continental September Traffic and Load Factor Rise

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Chicago-based United Continental Holdings (UAL - Free Report) , the parent company of United Airlines, reported impressive traffic numbers for the month of September with load factor (percentage of seats filled by passengers) rising as traffic growth outpaced capacity expansion.  


Traffic – measured in revenue passenger miles (RPMs) – was 17.52 billion, up 3.9% from 16.86 billion recorded a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 3.6% to 21.06 billion. Load factor, on the other hand, increased to 83.2% from 82.9% a year ago.

At the end of the first nine months of 2016, the carrier recorded 0.6% increase in RPMs to 158.77 billion, while ASMs grew 1.3% to 191.07 billion, both on a year-over-year basis. Load factor contracted 60 basis points to 83.1% in the period as capacity growth outpaced increase in traffic.

The company’s stock declined 1.52% in the last trading session, after traffic update.

The company posted a September On-time Performance of 70.9% and a completion factor of 99.2%.

Preliminary Performance Details

United Continental, which carries a Zacks Rank #3 (Hold), now expects consolidated PRASM in the third quarter of 2016 to decline in the band of 5.50% to 6.00%. You can see the complete list of today’s Zacks #1 Rank stocks here. The unit revenue result was at the upper end of the initial guidance of a decline in the range of 5.50% to 7.50% given higher September close-in bookings, primarily on account of certain holidays. The company’s year-over-year results were adversely impacted by lower surcharges, strong U.S. dollar and weaker-than-expected passenger demand.

United Continental expects capacity to increase by 2% in the third quarter and pre-tax margin to be in the range of 15.5% to 16.0%. The company had earlier estimated capacity increase in the range of 1.5–2.5% and pre-tax margin in the range of 13.5–15.5%. Fuel price, including all cash settled hedges, is estimated at $1.52 per gallon. Non-fuel operating expenses are expected to increase by 3.25% to 3.5%.

September traffic results have been mixed for the some of the key airlines carriers such as Alaska Air Group inc. (ALK - Free Report) ., Delta Air Lines Inc. (DAL - Free Report) and Southwest Airlines Co. (LUV - Free Report) as well. Nonetheless, the travel industry has overall seen a slight improvement due to the summer holiday season.

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