CHICAGO: United Airlines Holdings Inc on Monday (March 13) unexpectedly forecast a loss for the first quarter on account of higher operating costs and weaker-than-expected pricing power, plunging its shares.
The Chicago-based carrier now expects an adjusted loss between 60 cents and US$1 (RM2.69 and RM4.48) per share for the quarter through March. In January, the company forecast an adjusted profit between 50 cents and US$1 per share for the quarter.
Shares of the carrier were down 6.6% at US$45.58 in extended trading.
United expects higher non-fuel operating costs in the current quarter due to a potential new contract deal with its pilots, who have been conducting informational pickets to express frustration over delays in negotiations.
Rival Delta Air Lines’ deal with its pilots has raised pressure on both United and American Airlines to conclude their pilot contract negotiations.
United said it is “appropriate” to accrue the expense in the March quarter instead of the quarter through June. As a result, it now expects non-fuel operating costs to be flat to up 1% year-over-year. The costs were projected to be down 3%-4% earlier.
The company also expects its fuel bill in the quarter to be about 4%-7% higher than previous estimate.
Meanwhile, a combination of lower-demand in January and February and higher capacity has weakened its pricing power.
Total revenue per available seat mile, a proxy for pricing power, is estimated to be up 22%-23% in the first quarter from a year ago, slower than a 25% growth expected earlier.
United, however, said its outlook for the second quarter has improved, with total operating revenue now expected to be up in the “mid-teens” versus last year.
It also retained the full-year earnings outlook. – Reuters
