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 United's stock touched its highest level since late 2007 a day after
reporting that unit revenue, an important measure called passenger
revenue per available seat mile, rose as much as 12.5 percent last
month from a year earlier as the later Thanksgiving in 2013 shifted
some holiday traffic into December.
United also attributed part of the December gain to some 1,200
flights it canceled because of winter storms. Cancellations tend to
help unit revenue as more travelers are put on remaining flights.
Other carriers had a strong December. Newly merged American Airlines
Group <AAL.O> on Thursday said unit revenue rose about 9 percent at
American Airlines and 12 percent at US Airways last month. Southwest
Airlines this week said unit revenue rose between 14 percent and 15
percent from the same month in 2012. Delta Air Lines Inc <DAL.N>
reported a 10 percent rise in unit revenue last week.
December revenue results "suggest a bullish setup into (fourth
quarter) EPS," Morgan Stanley airline analyst John Godyn said in a
note to clients on Wednesday.
U.S. airlines have returned to profitability by merging, cutting
unprofitable routes and aligning their flying better with demand.
Lower oil prices lately have also helped bolster sentiment on the
sector.
"The industry is back to stability," said Michael Boyd, president of
Colorado-based airline consulting firm Boyd Group International. He
said he expected profits from the industry in 2014.
"There are only four network carriers now, and all of them
understand that the need is to circle your wagons and protect your
turf and that's what they are doing," Boyd said. "By and large, they
are not trying to kill each other, which brings stability."
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United said consolidated traffic grew 4.1 percent in December and
unit revenue grew 11.5 percent to 12.5 percent, more than it
originally expected.
Some analysts said United's strong December performance could
translate into a possible announcement about returning capital to
shareholders. Delta re-started a dividend and launched a share
buyback last year.
United shares were up 7.3 percent to $44.01 in afternoon trading
after touching a high of $46.19 earlier in the day. Delta gained 4
percent to $31.03 and Southwest rose 2.6 percent to $20.70. American
Airlines was up 6.2 percent to $29.34.
(Reporting by Nivedita Bhattacharjee in
Chicago and Karen Jacobs in Atlanta; editing by Meredith Mazzilli)
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