United Continental Holdings, Inc today reported second-quarter 2012 net income of $545 million or $1.41 per diluted share, excluding $206 million of net special charges. Including special charges, UAL reported second-quarter 2012 net income of $339 million or $0.89 per diluted share.
· UAL second-quarter consolidated passenger revenue increased 2.3 percent year-over-year. Second-quarter consolidated passenger revenue per available seat mile (PRASM) increased 3.0 percent compared to the same period in 2011.
· Second-quarter consolidated fuel expense increased 5.6 percent, or $181 million, year-over-year.
· Consolidated unit costs (CASM) holding fuel rate and profit sharing constant and excluding special charges and third-party business expense for second-quarter 2012 increased 2.1 percent year-over-year. Second-quarter consolidated CASM increased 4.6 percent year-over-year.
· UAL ended the second quarter with $8.2 billion in unrestricted liquidity.
· UAL accrued $54 million for profit sharing, based on year-to-date profitability.
“I want to thank my co-workers for all they did to help us earn a profit this quarter,” said Jeff Smisek, UAL’s president and chief executive officer. “While we still have work to do, we are making the right investments in our future, and we look forward to delivering the benefits of those investments to our customers around the globe.”
Second-Quarter Revenue and Capacity
For the second quarter of 2012, total revenue was $9.9 billion, an increase of 2.4 percent year-over-year excluding special items. Including special items in 2011, second-quarter total revenue increased 1.3 percent year-over-year. Second-quarter consolidated passenger revenue rose 2.3 percent to $8.8 billion, compared to the same period in 2011.
Consolidated revenue passenger miles (RPMs) increased 0.5 percent on a consolidated capacity (available seat miles) decrease of 0.6 percent year-over-year for the second quarter, resulting in a second-quarter consolidated load factor of 84.3 percent.
Consolidated yield for the second quarter of 2012 increased 1.8 percent year-over-year. Second-quarter 2012 consolidated PRASM increased 3.0 percent compared to the same period in 2011.
Mainline RPMs in the second quarter of 2012 increased 0.5 percent on a mainline capacity decrease of 0.2 percent year-over-year, resulting in a second-quarter mainline load factor of 84.7 percent. Mainline yield for the second quarter of 2012 increased 1.0 percent compared to the same period in 2011. Second-quarter 2012 mainline PRASM increased 1.8 percent year-over-year.
“We continued redeploying domestic aircraft in the second quarter and are pleased with the early financial results on those routes,” said Jim Compton, UAL’s executive vice president and chief revenue officer. “Our extensive fleet and industry-leading global network enable us to reallocate aircraft to provide customers with more options.”
Cargo and other revenue in the second quarter of 2012 increased 3.4 percent, or $39 million, year-over-year to $1.2 billion.
Total operating expenses, including special charges, increased $363 million, or 4.0 percent, in the second quarter compared to the same period of 2011. Second-quarter 2012 operating expenses, excluding fuel, profit sharing, special charges and third-party business expense, increased $158 million, or 2.9 percent, year-over-year.
Third-party business expense was $60 million in the second quarter. Consolidated and mainline CASM, excluding special charges and third-party business expense, increased 4.1 percent and 4.5 percent, respectively, in the second quarter of 2012 compared to the same period of 2011. Second-quarter consolidated and mainline CASM, including special charges, increased 4.6 and 5.2 percent year-over-year, respectively.
In the second quarter, consolidated and mainline CASM, excluding special charges and third-party business expense and holding fuel rate and profit sharing constant, increased 2.1 percent and 1.7 percent, respectively, compared to the results for the same period of 2011.
“We had a solid quarter during which we strengthened our balance sheet, invested in our business, and generated a return in excess of our cost of capital,” said John Rainey, UAL’s executive vice president and chief financial officer.
Second-Quarter Liquidity and Cash Flow
UAL ended the second quarter with $8.2 billion in unrestricted liquidity, comprised of $7.7 billion of cash, cash equivalents and short-term investments and $500 million of undrawn commitments under a revolving credit facility. During the second quarter, the company generated $959 million of operating cash flow and had gross capital expenditures of $500 million. The company made debt and net capital lease payments of $258 million including $69 million of prepayments in the second quarter.
Second-Quarter 2012 Events
· United recorded a U.S. Department of Transportation domestic on-time arrival rate of 76.4 percent and a system completion factor of 99.1 percent for the quarter. For international flights, United recorded an on-time arrival rate of 72.6 percent. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
· The company accrued $54 million for 2012 profit sharing based on year-to-date profitability. Co-workers earned cash incentive payments for on-time performance totaling $4 million during the quarter.
· United introduced its Outperform Recognition program, where MileagePlus customers, using United’s mobile app, can recognize an employee for providing outstanding service. United employees who receive nominations are entered into a prize drawing for up to $50,000 in cash. Any MileagePlus member who submits a nomination is entered into a drawing for prizes, such as MileagePlus award miles and round-trip tickets on United.
· The company reached a tentative agreement with flight attendants from the company’s Continental subsidiary.
· During the quarter, United launched service to nine new markets, including routes from Washington/Dulles to Honolulu, Dublin and Manchester, England, as well as from New York/Newark to Buenos Aires, Argentina. The company also announced service to eight new markets during the quarter, including Denver’s first service to Asia with non-stop service to Tokyo, beginning in 2013.
· United introduced the first of 14 newly reconfigured two-cabin Boeing 767-300 aircraft, converting the fleet from domestic to international configuration. The aircraft now offers United BusinessFirst and an upgraded Economy cabin.
· United Economy Plus seating is now on 86 percent of United’s entire mainline fleet, and the company continues to install flat-bed seats in premium cabins on its international fleet. Nearly 150 aircraft have new flat-bed seats, more than any other U.S. carrier.
· The company introduced enhanced, gourmet entree options and harmonized meal service on its long-haul international flights for customers traveling in United Global First and United BusinessFirst.
· According to the 3rd annual Switchfly Reward Seat Availability Survey presented by IdeaWorks Company, United recently earned recognition as the carrier with the most award seat availability among U.S. global airlines.
· United opened its new Network Operations Center with leading technology, tools and comfort for co-workers who manage this 24/7 global operation.
· United is the official airline of Team USA, flying U.S. Olympic and Paralympic athletes to and from training, competitions, trials and the Olympic Games for the past 32 years.