November 28, 2020

United Airlines lost $185 million due to the hurricanes

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By Alana Wise, Reuters From Business Insider

  • reported a third-quarter drop in profits partly due to flight cancellations triggered by recent hurricanes. 
  • The company forecast a decline in passenger revenue per available seat mile, a gauge of profitability, for the current quarter. 

(Reuters) – United Airlines on Wednesday said its third-quarter net income fell slightly less than investors had feared as the third-largest U.S. carrier was hit by $185 million in pretax losses caused by canceled flights during the Atlantic hurricane season.

Its shares edged up slightly in after-hours trading.

The Chicago-based carrier said passenger revenue per available seat mile, a closely watched measurement of an airline’s performance, fell 3.7 percent, about 1 percentage point of which was attributable to disruptions caused by storms.

For the current quarter, United forecast that passenger revenue per available seat mile would decline by 1 percent to 3 percent.

In addition to the impact from unusually severe storms this season, United has been hurt in recent months by an increasingly competitive fare war in key markets against low-cost carriers like Spirit Airlines Inc and Frontier.

United has acknowledged the short-term impact on profit from matching sharply discounted fares against its competitors, but has said it would continue matching fares until it could outpace low-cost rivals.

For the third quarter, United posted a quarterly pre-tax margin of 10.4 percent and said it expects to have a pre-tax margin of between 3 percent and 5 percent in the fourth quarter.

It reported net income of $637 million, down 34 percent from $965 million in the year-ago quarter.

Excluding some special charges, United reported earnings per share of $2.22 per share. That beat ’s average forecast of $2.16, according to Thomson Reuters I/B/E/S. (Reporting by Alana Wise; Editing by Bill Rigby)

IMAGE:REUTERS/Louis Nastro

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