United Continental Holdings, Inc. Announces Second-Quarter 2011 Profit

United Continental Holdings, Inc. Announces Second-Quarter 2011 Profit

United Continental Holdings, Inc. Announces Second-Quarter 2011 Profit

UAL REPORTS SECOND-QUARTER $577 MILLION NET PROFIT EXCLUDING SPECIAL ITEMS;

$538 MILLION NET PROFIT ON GAAP BASIS

PR Newswire

CHICAGO, July 21, 2011 /PRNewswire/ -- United Continental Holdings, Inc. (NYSE: UAL) today announced second-quarter 2011 financial results. UAL results for the second quarter include the financial results of its two operating subsidiaries, United Airlines and Continental Airlines. Prior to the merger on Oct. 1, 2010, UAL results included only the financial results of United. Pro forma results that consolidate the financial results for Continental for the second-quarter 2010 and six months ended June 30, 2010, are included for meaningful year-over-year comparisons.

  • UAL reported a second-quarter 2011 net profit of $577 million or $1.49 per diluted share, excluding $39 million of net special items consisting primarily of integration-related costs and a one-time non-cash adjustment to revenue.  On a GAAP basis, UAL reported a second-quarter 2011 net profit of $538 million or $1.39 per diluted share.
  • UAL consolidated passenger revenue increased 10.1 percent in the second quarter of 2011 compared to the pro forma results for the same period in 2010. Second-quarter 2011 consolidated passenger revenue per available seat mile (PRASM) increased 9.0 percent compared to the pro forma results year-over-year.
  • Second-quarter 2011 consolidated fuel expense, excluding the impact of hedges, increased 45.2 percent, or $1.1 billion, year-over-year on a pro forma basis.
  • UAL ended the quarter with $8.6 billion in unrestricted cash, cash equivalents and short-term investments.

"Thanks to the hard work of my co-workers, who managed through tough weather issues and many integration changes during the quarter, we are making steady progress toward building the world's leading airline," said Jeff Smisek, UAL's president and chief executive officer.  "We are well positioned to deliver on the once-in-a-lifetime opportunities that this merger presents for our company and our people."

Second-Quarter Revenue and Capacity

For the second quarter of 2011, total revenue excluding special items was $9.7 billion, an increase of 9.1 percent compared to the pro forma results for the same period in 2010.  Total revenue during the second quarter, including special items, increased 10.3 percent to $9.8 billion year-over-year on a pro forma basis. Consolidated passenger revenue, including special items, for the second quarter rose 10.1 percent to $8.6 billion, compared to the pro forma results for the same period in 2010.  

Consolidated revenue passenger miles (RPMs) for the second quarter of 2011 decreased 0.1 percent on a pro forma basis, while capacity (available seat miles or ASMs) increased 1.0 percent year-over-year on a pro forma basis, resulting in a second-quarter consolidated load factor of 83.4 percent.  

Consolidated yield for the second quarter of 2011 increased 10.3 percent year-over-year on a pro forma basis.  Second-quarter 2011 consolidated PRASM increased 9.0 percent compared to the pro forma results for the same period in 2010.

Mainline RPMs in the second quarter of 2011 were flat on a mainline capacity increase of 1.1 percent year-over-year on a pro forma basis, resulting in a second-quarter mainline load factor of 84.1 percent. Mainline yield for the second quarter of 2011 increased 10.3 percent over the pro forma results for the same period in 2010.  Second-quarter 2011 mainline PRASM increased 9.1 percent year-over-year on a pro forma basis.

"Our capacity discipline drove solid unit revenue and yield growth in the second quarter," said Jim Compton, UAL's executive vice president and chief revenue officer. "We will continue to offer products our customers value and are willing to pay for."

Due to the decline in demand for travel to Japan following the March 11, 2011, earthquake and tsunami, the company reduced capacity to and from Japan by 11.8 percent during the quarter.  UAL estimates that second-quarter consolidated passenger revenue decreased by approximately $100 million as a result of the reduced demand due to the tragedy in Japan.

Passenger revenue for the second quarter of 2011 and period-to-period comparisons of related pro forma statistics for UAL's mainline and regional operations are as follows:




2Q 2011

Passenger

Revenue

(millions)


Passenger

Revenue  vs.

2Q 2010

PRASM  vs.

2Q 2010

Yield vs.

2Q 2010

ASM  vs.

2Q 2010









Domestic


$3,435


7.7%

9.7%

9.6%

(1.8%)









Atlantic


1,625


13.4%

5.6%

8.3%

7.3%

Pacific


1,123


3.8%

5.7%

7.9%

(1.8%)

Latin America


681


30.8%

20.2%

22.7%

8.8%

International


$3,429


12.9%

8.3%

10.8%

4.3%









Mainline


$6,864


10.3%

9.1%

10.3%

1.1%

Regional


1,742


9.5%

8.8%

10.3%

0.6%









Consolidated


$8,606


10.1%

9.0%

10.3%

1.0%












Cargo and other revenue in the second quarter of 2011 increased 2.0 percent, or $22 million, year-over-year on a pro forma basis.

Second-Quarter Costs

Total consolidated expenses, including special items, increased $974 million, or 12.1 percent, in the second quarter compared to the pro forma results for the same period of 2010. Second-quarter fuel costs, excluding the impact of fuel hedges, increased $1.1 billion year-over-year. During the quarter, the company recognized $278 million of benefit from its fuel hedge settlements. Second-quarter 2011 consolidated expenses, excluding fuel, profit-sharing and special items, increased $171 million, or 3.2 percent, year-over-year on a pro forma basis.  

Consolidated costs per available seat mile (CASM), excluding special items, increased 11.1 percent and mainline CASM, excluding special items, increased 10.8 percent in the second quarter of 2011 compared to the pro forma results for the same period last year. Second-quarter consolidated and mainline CASM, including special items, increased 11.0 and 10.7 percent year-over-year on a pro forma basis, respectively.

The company has hedged approximately 51 percent of its expected remaining fuel needs for 2011.

In the second quarter, consolidated and mainline CASM, excluding special items and holding fuel rate and profit sharing constant, increased 1.3 percent and 1.7 percent, respectively, compared to the pro forma results for the same period of 2010.

"This quarter, we moved another step closer to achieving our synergy targets and financial goals, thanks to the efforts of our entire team at the new United," said Zane Rowe, UAL's executive vice president and chief financial officer.  "While we still have a lot of work to do, we are working together across the company to outperform our competitors."

Second-Quarter Liquidity and Cash Flow

UAL ended the second quarter of 2011 with $8.6 billion in unrestricted cash, cash equivalents and short-term investments. During the second quarter, the company generated $753 million of operating cash flow and had gross capital expenditures of $178 million. The company made scheduled debt and net capital lease payments of $1.0 billion, including $570 million to repay UAL 4.5% convertible notes put to the company in June.  Year-to-date, the company has made $1.8 billion of debt and capital lease payments, including $300 million of prepayments.

Integration Is On Track

During the quarter, United and Continental continued to make steady progress integrating products, services and policies to provide a more consistent travel experience for customers.  When traveling on either carrier, customers may now shop for flights, obtain seat assignments and check flight status on united.com and continental.com, and check in and print boarding passes for flights using any United or Continental check-in kiosk at 90 airports worldwide. The carriers introduced Premier Access, a new package of priority airport services for elite-level flyers and premium-cabin customers, and aligned meal, snack and beverage services on board flights and in airport club lounges. In addition, the company announced that United's loyalty program name will be MileagePlus® and offered MileagePlus and OnePass members the ability to combine miles to earn awards faster.

Beginning with Chicago O'Hare International Airport and following at San Francisco International Airport, the company unveiled newly branded signage at airport check-in and boarding areas and remains on track to re-brand its hub airports over the remainder of the year. The carriers have co-located check-in, ticket counter and gate facilities at 46 airports since the closing the merger and now have a single area for check-in at 275 airports systemwide.  Nearly half of the total fleet, or 601 aircraft, is now repainted in the new United livery.

Notable Second-Quarter 2011 Accomplishments

  • United and Continental recorded U.S. Department of Transportation domestic on-time arrival rates of 77.8 percent and 74.2 percent, respectively, and system completion factors of 98.6 percent and 99.7 percent, respectively, for the second quarter.  For international flights, United and Continental recorded on-time arrival rates of 77.7 percent and 79.4 percent, respectively.  The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
  • The company accrued $90 million for profit-sharing programs for results of the first six months of 2011, and employees of the combined company earned cash incentive payments for operational performance totaling $5 million during the second quarter of 2011.  
  • The company, in partnership with the Houston Airport System, announced construction at Bush Intercontinental Airport to build a new Terminal B south concourse dedicated to domestic regional jet operations will begin by the end of the year. In addition, the company extended its lease on Terminal C at Bush Intercontinental Airport to 2027.
  • The company continued to install flat-bed seats in first and business class and now has the new seats on 123 aircraft, more than any other U.S. carrier.
  • The company, through its carriers, continued to build its route network to provide unmatched flight options for travelers, launching new flights to Stuttgart, Germany, and Port-au-Prince, Haiti, from its New York/Newark Liberty hub, service to Shanghai, China, Hilo, Hawai'i, and Guadalajara, Mexico, from its Los Angeles hub and flights to Hilo and Guadalajara from its hub at San Francisco.

About United Continental Holdings, Inc.

United Continental Holdings, Inc. (NYSE: UAL) is the holding company for both United Airlines and Continental Airlines. Together with United Express, Continental Express and Continental Connection, these airlines operate an average of 5,765 flights a day to 377 airports on six continents from their hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark Liberty, San Francisco, Tokyo and Washington, D.C. United and Continental are members of Star Alliance, which offers 21,000 daily flights to 1,160 airports in 181 countries. United and Continental's more than 80,000 employees reside in every U.S. state and in many countries around the world. For more information about United Continental Holdings, Inc., go to UnitedContinentalHoldings.com. For more information about the airlines, see united.com and continental.com or follow on Twitter and Facebook.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements included in this release are forward-looking and thus reflect our current expectations and beliefs with respect to certain current and future events and financial performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook" and similar expressions are intended to identify forward-looking statements.  Additionally, forward-looking statements include statements which do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law. Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: our ability to comply with the terms of our various financing arrangements; the costs and availability of financing; our ability to maintain adequate liquidity; our ability to execute our operational plans; our ability to control our costs, including realizing benefits from our resource optimization efforts, cost reduction initiatives and fleet replacement programs; our ability to utilize our net operating losses; our ability to attract and retain customers; demand for transportation in the markets in which we operate; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact that global economic conditions have on customer travel patterns; excessive taxation and the inability to offset future taxable income; general economic conditions (including interest rates, foreign currency exchange rates, investment or credit market conditions, crude oil prices, costs of aviation fuel and energy refining capacity in relevant markets); our ability to cost-effectively hedge against increases in the price of aviation fuel; any potential realized or unrealized gains or losses related to fuel or currency hedging programs; the effects of any hostilities, act of war or terrorist attack; the ability of other air carriers with whom we have alliances or partnerships to provide the services contemplated by the respective arrangements with such carriers; the costs and availability of aviation and other insurance; the costs associated with security measures and practices; industry consolidation or changes in airline alliances; competitive pressures on pricing and on demand; our capacity decisions and the capacity decisions of our competitors; U.S. or foreign governmental legislation, regulation and other actions (including open skies agreements); labor costs; our ability to maintain satisfactory labor relations and the results of the collective bargaining agreement process with our union groups; any disruptions to operations due to any potential actions by our labor groups; weather conditions; the possibility that expected merger synergies will not be realized or will not be realized within the expected time period; and other risks and uncertainties set forth under Item 1A., Risk Factors of our Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. Consequently, forward-looking statements should not be regarded as representations or warranties by us that such matters will be realized.

-tables attached-






UNITED CONTINENTAL HOLDINGS, INC.

STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2011 AND

PRO FORMA RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2010
















Three Months Ended




Six Months Ended





June 30,




June 30,







2010


%




2010


%

(In millions, except per share data)

2011


Pro Forma

(A)


Increase /

(Decrease)


2011


Pro Forma

(A)


Increase /

(Decrease)

Operating Revenue:











Passenger:













Mainline

$6,864


$6,224


10.3


$12,627


$11,375


11.0


Regional

1,742


1,591


9.5


3,166


2,886


9.7


Total Passenger Revenue

8,606


7,815


10.1


15,793


14,261


10.7


Cargo

316


301


5.0


599


560


7.0


Special revenue item (D)

107


-


NM


107


-


NM


Other

780


773


0.9


1,512


1,469


2.9


Total Operating Revenue

9,809


8,889


10.3


18,011


16,290


10.6














Operating Expenses:













Aircraft fuel (B)

3,227


2,478


30.2


5,899


4,559


29.4


Salaries and related costs

1,916


1,881


1.9


3,722


3,639


2.3


Regional capacity purchase (C)

615


610


0.8


1,188


1,194


(0.5)


Landing fees and other rent

502


491


2.2


975


966


0.9


Aircraft maintenance materials and outside repairs

444


370


20.0


883


728


21.3


Depreciation and amortization

385


372


3.5


773


758


2.0


Distribution expenses

375


359


4.5


725


676


7.2


Aircraft rent

252


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