United: First quarter revenue may fall 13.3 percent
United Airlines, the third-biggest U.S. carrier, said first-quarter unit revenue may fall as much as 13.3 percent as the recession erodes travel demand.
Revenue from each seat flown a mile in its main jet operations is expected to decline in a range of 12.3 percent to 13.3 percent from a year earlier, United parent UAL Corp. said today in a regulatory filing. Traffic, in miles flown by paying passengers, may drop as much as 16.2 percent, the company said.
United joins AMR Corp.'s American Airlines and Continental Airlines Inc. in forecasting declines in unit revenue as fewer people travel and as carriers offer lower fares in an effort to boost demand.
"The revenue environment continues to be challenging for all carriers, as the impact of the economy is affecting demand for both business and leisure travel," Kathryn Mikells, chief financial officer for Elk Grove Township-based UAL, told employees in a message today.
UAL fell 44 cents, or 8.5 percent, to $4.75 at 11:19 a.m. New York time in Nasdaq Stock Market composite trading. The shares declined 78 percent in the 12 months through yesterday.
The first-quarter cost to fly each seat a mile, excluding fuel, unspecified accounting charges and regional partners, is expected to rise in a range of 1 percent to 1.5 percent from a year earlier, the carrier said. In January, United forecast a 5 percent increase.
Unit revenue including regional jet partners may fall 11 percent to 12 percent in the quarter, United said. Traffic on that basis may drop as much as 14.5 percent, the carrier said.
Cash Balance
UAL said it will end the quarter with as much as $2.2 billion in cash not dedicated to specific uses. The carrier estimated it will have $80 million in cash losses from fuel- hedging contracts that settled in the quarter.
Alaska Airlines, a unit of Alaska Air Group Inc., said today that unit revenue fell 3.9 percent in February and 1.3 percent for the quarter's first two months. Traffic declined 10.2 percent in February and 7.5 percent for the first two months, the Seattle-based airline said in a regulatory filing.