How Did United Perform Operationally In December?

+27.33%
Upside
47.24
Market
60.15
Trefis
UAL: United Airlines Holdings logo
UAL
United Airlines Holdings

After a lukewarm third quarter due to weakness in passenger yields in the Atlantic (-9.7%) and Pacific (-2.6%) regions, United Continental maintained strict capacity discipline internationally. In December, the company cut its capacity in the Atlantic region by -4.2% y-o-y, while growing it significantly in the Pacific, mainly China and Korea (+10.5% y-o-y). Consequently, so far in the year, United’s capacity is up only 1.4%, driven mainly by growth in domestic markets, entry into Latin America and continued dominance in the Pacific region. The number of passengers onboarded continued to increase by 2.7% y-o-y in December, bringing the full year numbers to 1.43 billion (up 2% y-o-y). A slight improvement was also seen in the load factor or occupancy rate in December, likely due to the cut in capacity in the Atlantic. However, the full year load factor saw a decline of 50 basis points. The affect of this decline can be expected to be seen on the top line in the company’s full year results.

Going forward, the company expects the pressure on its passenger revenue average seat miles (PRASM) to subside. It has revised its guidance for PRASM from a decline of 3%-4% to 1.25%-1.75% in the final quarter of the year, mainly due to strong business and leisure demand during the holidays and improvement in close-in yields.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for United Continental

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