United Airlines Adding Flights, Price Matching

United Airlines Adding Flights, Price Matching”

Airline stocks are sinking Wednesday, in a repeat of last October's dive, after United Airlines (UAL) vowed to keep matching fares from low-priced rivals, renewing fears of a price war that could hit earnings across the industry.

Some Wall Street analysts appear to be unconvinced the United strategy would help it grow margins.

Shares of United Continental Holdings Inc. slid more than 11% Wednesday, as concerns about the company's plan to expand capacity in the next three years offset a fourth-quarter profit and revenue beat.

The presentation gave CEO Oscar Munoz along with other top brass at United an opportunity to impress its investors, who dumped shares following a tense earnings call with executives last quarter that gave a not so clear picture of costs and other important metrics for 2018.

United posted net profit of $580 million, or $1.99 a share, for the quarter, up from $397 million, or $1.26 a share, in the year-earlier period, benefiting from increased demand for air travel. "We can't let low-priced carriers have price advantages in our hubs".

The airline released per share earnings forecast of $6.50 to $8.50 for this year.

Kirby said United can't afford to ignore discount carriers like Spirit Airlines because half of United's customers choose an airline mostly on ticket price.

However, immediately after, shares plunged during trading after-hours at the time of an investor presentation that has been long awaited in which United unveiled its strategy to add additional seats while maintaining a tight lid on its costs.

Cowen analyst Helane Becker said she had been expecting 4% to 6% capacity growth this year, but then a slowing growth rate after that. While United benefits from lucrative global operations at its coastal redoubts in San Francisco and Newark, New Jersey, profit margins at its mid-continent hubs - Chicago, Houston and Denver - trail rivals by 10 percentage points, Kirby said. And the company is targeting 2018 earnings per share of $6.50-$8.50, a figure that will swell to $11-$13 a share in 2020.

United forecast Q1 unit revenue in a range of flat to up 2% - better than the 0.2% increase it put up for Q4, which was largely in line with the company's expectations. Capacity growth was seen coming in at 3.5%-4.5%. Revenue rose 4.3 percent to $9.44 billion, in line with expectations. Pretax margins were 6.7%.

"We definitely understand management's decision to focus on improving their domestic network as the company admittedly shrunk too much post the Continental merger, but that was nearly a decade ago and investors are likely to be somewhat frustrated by United's aggressive growth rate", Becker wrote.

American in November launched daily nonstop service from Los Angeles to Beijing; United this month said it would remove charges on passengers' second checked bag on flights from North America to China and Hong Kong.

A worry is that the increased capacity, especially the US market, where United a year ago had said some fares had dropped to $10, will mean the airline will have to match competitor fares.

Like this



25 January 2018
Lam Research (LRCX) Releases Quarterly Earnings Results, Beats Expectations By $0.67 EPS
Companies with higher future earnings are usually expected to issue higher dividends or have appreciating stock in the future. DA Davidson reaffirmed a buy rating and set a $235.00 price target on shares of Lam Research in a research report on Monday.

25 January 2018
Lowe's plans to hire more than 50K people ahead of busy season
The company is hiring people for roles such as sales specialists and customer-service associates, it said. Starting wages "vary by position and experience", company spokesman Steve Salazar said in an email.

25 January 2018
Cuts Holdings in Freeport-McMoRan Inc (FCX)
Sun Life Financial INC boosted its stake in Freeport-McMoRan by 96,340.0% during the second quarter. (NYSE: FCX ). Macguire Cheswick Tuttle Counsel Llc has invested 0.61% of its portfolio in McDonald's Corporation (NYSE:MCD).

25 January 2018
Expecting arrest, Hafiz Saeed moves court
The court directed the Ministry of Interior and Punjab home department to file written replies to the petition by March 7. It has been declared as a foreign terrorist organisation by the USA in June 2014.

25 January 2018
Man lucky to survive after filming himself being hit by train
The incident happened at Bharat Nagar area on Sunday but the video surfaced on Wednesday. The speeding train suddenly hits the man and the image goes blank after a loud sound.

25 January 2018
Sylvester Stallone Predicts Eagles Win Super Bowl Vs. Patriots 'By Knockout'
A quick refresher: Lane Johnson had a quote back in training camp in August about providing Birds fans with beer if the Eagles won the Super Bowl.

25 January 2018
Ranveer Singh calls Alauddin Khilji a 'monster'
However, after several protests, in the new version of Ghoomar , Deepika's mid-riff has been covered through special effects . The film was slated to release along with PadMan on January 26, but averted the clash by shifting it to February 9.

25 January 2018
Stock In Spotlight: Altria Group, Inc. (NYSE:MO)
It is negative, as 91 investors sold MO shares while 516 reduced holdings. 118 funds opened positions while 420 raised stakes. It dived, as 54 investors sold HCP shares while 188 reduced holdings. 114 funds opened positions while 237 raised stakes.

25 January 2018
Kylie Jenner is ready to be a mom
The anxiety of it all has her fighting back the tears alone at night worrying about her delivery room decisions. The source also said that Tyga has proven in the past to be a more reliable person than Scott.

25 January 2018
Alaska Air Group (NYSE:ALK) Given Media Sentiment Rating of 0.36
Smead Capital Management Inc decreased Alaska Air Group Inc ( ALK ) stake by 1.33% reported in 2017Q3 SEC filing. (NYSE:ALK). Alaska Air Group has a 52-week low of $61.10 and a 52-week high of $101.43. (NYSE:ALK) has a Gross Margin score of 14.00000.