July 28, 2021

Merger Costs Weigh on United Continental

The nation’s top carrier, United Continental, narrowed its fourth-quarter net loss to $138 million, an improvement from its loss of $325 million in the year-earlier period, the company said Thursday.

The loss was attributed largely to costs associated with the 2010 merger of United Airlines and Continental Airlines. Revenue was up 5.5 percent, to $8.9 billion, in the quarter.

The company recorded a full-year profit of $840 million, down 12 percent from the previous year.

Besides United Continental, the nation’s other top airlines — Delta Air Lines, US Airways and Southwest Airlines — all turned a profit last year despite a dismal global economy and record-high fuel prices.

By raising ticket prices and flying fewer planes, the airlines hope they can raise revenue this year faster than fuel prices can rise, while cutting capacity to offset a slowdown in demand.

On Wednesday, Delta Air Lines said fourth-quarter profit surged to $425 million, up from $19 million in the year-earlier period. In the quarter, the company filled nearly 82 percent of its seats while it reduced capacity by 3.5 percent. Revenue per passenger rose 12 percent as a result of higher ticket prices.

Delta reduced its capacity throughout most of its destinations, especially Europe, which saw a 10 percent drop. Latin America was a rare exception as Delta increased capacity there by 5 percent. The company emphasized it would continue to reduce its capacity in the first quarter by 3 to 5 percent.

Southwest Airlines saw its net income grow 16 percent in the fourth quarter, to $152 million, with a 32 percent jump in revenue to $4.1 billion. US Airways, for its part, said its net income declined by 35 percent to $18 million in the fourth quarter. Revenue in that period rose 8.5 percent to $3.2 billion.

So far, the airlines expect these gains to continue in the first quarter of 2012.

“If anything, the new year has seen a step up in business demand,” the US Airways president, Scott Kirby, said on a conference call Wednesday. “The pricing environment remains strong and the industry is successfully recovering high fuel prices.”

Article source: http://feeds.nytimes.com/click.phdo?i=4974966be558a44ebea7743bf98dd400

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