In the first quarter, the world's biggest carrier said it lost $448 million primarily because of costs associated with the integration of reservations and revenue management systems following the merger with Continental. The conversion required 1.7 million hours of training, upgrades to more than 12,000 workstations, migrations of more than 17 million passenger records and reductions in booking levels in order to better manage the transition.
Nevertheless, United's July 10 schedule change announcement prompted two veteran analysts to conclude that UA's problems may be behind it.The changes include new daily service from San Francisco to Taiwan and Paris, as well as expanded service in Chicago and minor growth elsewhere. Earlier, United filed changes that eliminated Houston-Paris service and several other Houston flights. "We are now seeing concrete evidence that UAL is taking the right steps to generate meaningful efficiencies from the merger," wrote Imperial Capital analyst Bob McAdoo. CRT Capital Group analyst Mike Derchin wrote: "Evidence that the integration is beginning to work comes from UAL's recent announced plans to launch year-round and seasonal service over several new international and domestic routes." United shares have risen 12% year to date, but they have fallen back in July as oil prices have risen. For the month, shares are down 11% to $21.55. During the same period, the ARCA Airline Index is down 4% while Delta and US Airways (LCC) shares are down 10%. United will report second-quarter earnings on Thursday. Analysts surveyed by Thomson Reuters are estimating earnings of $1.70 a share, up from $1.49 a year earlier. McAdoo has an outperform rating and a $36 price target for United. He noted that this fall, United will cut about 1% of its capacity in Houston, currently its largest hub, because "as United continues to integrate United and Continental under one brand, it is clear that some of Continental's traffic that connected over Houston can better be routed over the United hubs in Chicago and Denver."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV