United Airlines reports strong 2017 but braces for tough year ahead

United Airlines reports strong 2017 but braces for tough year ahead

United Airlines has reported full-year net income of $2.1 billion, diluted earnings per share of $7.02, pre-tax earnings of $3 billion and a pre-tax margin of 7.9 per cent.

However, shares in the carrier fell by nearly six per cent in after-hours trading, as it unveiled plans to boost capacity and cut prices to battle low-cost carriers.

United said it expected to increase its capacity by between four and six per cent this year, and would likely grow by a similar amount in 2019 and 2020.

The carrier said it hoped this would give it a competitive edge in its fight against low-cost airlines.

Releasing the results, United chief executive Oscar Munoz said: “I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance.

ADVERTISEMENT

“Reliability is an important pillar in our continued focus on further improving the customer experience.”

He added: “Looking ahead, we are committed to improving profitability over the long-term by building on the strong foundation we have laid over the past two years.

“Everyone at United is excited to enter 2018 with a clear set of priorities and a renewed sense of purpose around unlocking the full potential of United Airlines.”

During 2017, United consistently notched operational bests in on-time arrivals and completions while seeing the fewest cancellations and the best baggage performance in its history.

At the same time, United repurchased $553 million of its common shares in the fourth quarter, bringing the full-year share repurchases to $1.8 billion and completing the company’s July 2016 $2 billion share repurchase program.

The company’s board of directors authorised a new $3 billion share repurchase program in December.

United employees earned $349 million in profit sharing for 2017.

For the fourth quarter, revenue was $9.4 billion, an increase of 4.3 per cent year-over-year.

Consolidated passenger revenue per available seat mile was up 0.2 per cent, compared to the fourth quarter of 2016.

“Everything we do at United is underpinned by a commitment to deliver top tier operational reliability,” said Scott Kirby, president of United Airlines.

“Thanks to the drive and dedication of our employees, we have significantly raised the bar in this area, delivering a record-setting operational performance in 2017.

“Looking ahead, our focus will be on continuing to improve customer service and expanding United’s network to offer customers more choice.”

For the 12 months ended December 31st the company’s pre-tax income was $3 billion and return on invested capital was 13.8 per cent.

“We are encouraged by our financial results in the fourth quarter which capped a year of strong earnings.

“Additionally, throughout the year we made significant investments in the business while continuing to return cash to our shareholders through $1.8 billion of share repurchases,” concluded Andrew Levy, executive vice president and chief financial officer of United Airlines.