United reports $1.7B in 3Q earnings, below expectations during leadership changes
United Airlines reported quarterly net income Thursday of $1.7 billion, or $4.53 per diluted share, which fell below expectations as the company struggles with leadership changes.
A Thomson Reuters I/B/E/S forecast had projected earnings of $4.55 per share.
United Continental Holdings shares were relatively unchanged Thursday, closing up 1.7% at $56.02.
The quarterly results were based on revenue of $10.3 billion, a decrease of 2.4% from the period of July, August and September 2014. Passenger revenue per available seat mile declined 5.8% during the quarter, driven largely by a strong U.S. dollar, lower surcharges and corporate travel reductions in the energy sector, the company said.
Acting CEO Brett Hart said the $1.7 billion earnings represented the sixth consecutive quarter of gains.
Jim Corridore, equity analyst with S&P Capital IQ, maintained a "buy" recommendation for United because "profit soared" in the quarter aided by fuel costs, despite weaker demand for tickets from business travelers in the energy sector.
The results came at a time of transition for the company. Former CEO Jeff Smisek was ousted in early September after an internal company investigation into dealings with the Port Authority of New York and New Jersey, which operates Newark airport, a United hub.
His successor, Oscar Munoz, a former CSX Corp. railroad executive, suffered a heart attack Oct. 15 and is taking an indefinite leave while recovering.
Hart, who had been general counsel and was named acting CEO on Monday, said the company would focus on its employees, improving its processes and investing in its systems.
“The last several weeks have been very eventful for United, with news of Oscar’s heart attack hitting many of us hard," Hart told analysts. "However, I want to assure you that the United team has never been more unified and committed to making United great again.”
As with other airlines, lower fuel costs contributed to United's earnings. Fuel costs -- including losses from hedging -- dropped to $2 billion from $3.1 billion during the same period a year earlier.
The company spent $230 million in the quarter, to complete a $1 billion share buyback program. Another $32 million was spent toward a new $3 billion authorization, bringing the total returned to shareholders in the quarter to $262 million.