United shares get a boost after improved revenue forecast

 United Airlines (UAL) revised its financial guidance for the second quarter, projecting that stronger international bookings may lead to a lower revenue dip than previously expected.

Shares were up 4.03% to $45.15 following a call with investors in which United said that consolidated passenger unit revenue for the April quarter should dip between 6.5% to 7.5%, an improvement over it’s earlier projection that it could decline as much as 8.5%.

“What we’ve seen mostly improve is the on the international side,’’ Jim Compton, United’s vice chairman and chief revenue officer, said during the call. He noted that while revenue on the domestic side performed slightly below expectations, it too got a boost later in the quarter thanks to last minute bookings by corporate travelers.

That uptick in business trekkers was likely welcome news as United struggles to woo back those lucrative, premium-paying fliers and close the profit and revenue gap it currently has with its larger peers.

United outlined a number of initiatives that it says will add up to $3.1 billion in savings and value by 2018. They include upgrading its revenue management system to better forecast passenger demand, continuing to swap out its 50 seat regional jets for larger 737’s, and tweaking its MileagePlus loyalty program.

Roughly $300 million is expected to be saved or accrued by the airline being more on time and reliable. United's performance improved last year, with 78.15% of its flights arriving on time, but it has lagged behind its major network rivals. “As we talk to our corporate partners, reliability is an extremely important part of what they tell us,’’ Compton said.

United is also trying to improve its product, including boosting the number of roomier, Economy Plus seats by 20%.

Still, some analysts questioned United’s assertion that it will see a $3.1 billion improvement between 2015 and 2018.

Jamie Baker, of JP Morgan projected in an investors note that updated employee contracts will raise United's costs by roughly $900 million. “Therefore,'' Baker wrote, "our interpretation is that (United) is guiding to roughly $1 billion of incremental improvement over the next two years.’’