How Did United Perform Operationally In January?
After reporting a solid fourth quarter due to strength in close-in yields during the holiday season and continued growth momentum in Latin America, United Continental (NYSE:UAL) announced positive developments in almost all of its key metrics for January 2017. In January, the company saw its traffic increase 4.7% in the domestic markets and 3.3% internationally. Barring Atlantic, all of United’s operational regions reported growth in revenue passenger miles in the month. Talking about capacity, it was up more than expected in the month of January, both in the domestic markets (+5.3% y-o-y) and internationally (+4.1% y-o-y). The company attributes the excess capacity to higher completion percentage due to fewer disruptions related to weather conditions. However, to manage the yield headwinds in Atlantic, the company kept its capacity in the region almost flat.
While the number of passengers onboarded increased by 4.5% y-o-y in January, a slight deterioration was seen in the load factor or occupancy rate, likely due to the headwinds in the Atlantic region and the technology outage episode in late January when United’s flights were grounded for over 2 hours.
Going forward, the company expects the pressure on its passenger revenue average seat miles (PRASM) to subside. It continues to expect PRASM to come in the earlier provided guidance of -1.0% to +1.0% in the first quarter of 2017, mainly due to strong business and leisure demand.
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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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