This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Has United Turned the Corner With Its Earnings Beat?

CHICAGO ( TheStreet) -- United (UAL - Get Report) beat Wall Street estimates as second-quarter net income rose 51% and costs fell.

The carrier announced a stock buyback plan, leaving some analysts to wonder whether the carrier might have finally turned the corner.

Excluding items, the carrier reported net income of $919 million, or $2.34 a share. Analysts surveyed by Thomson Reuters had estimated $2.16 a share. Revenue rose 3.3% to $10.3 billion, in line with estimates.

Five Worst U.S. Airlines of All Time

United Should Close Dulles Hub, Analyst Says, as He Cuts Rating

Boeing 747 Fades Out But Lufthansa Flies a Fresh One to JFK
Including items, net income was $789 million, or $2.01 a share.

In premarket trading just before the bell, United shares were trading at $48.97, up $2.97 or 6.5%.

During the quarter, consolidated passenger revenue per available seat mile rose 3.7%.

"PRASM and company appear to be turning the corner," Cowen & Co. analyst Helane Becker wrote in a note released shortly after the earnings were reported. "We are the most bullish about the 2% to 4% expected increase in PRASM during 3Q14 as it is in line with Delta (DAL - Get Report) and shows the company is beginning to bridge the gap in terms of PRASM," Becker said.

Domestic PRASM rose 7.8% as domestic capacity fell 1.4%. Domestic revenue was $3.5 billion while international revenue was $3.6 billion.

International PRASM rose 1% on a 2.1% capacity increase. Latin American PRASM rose 4.4% despite a 5.6% capacity increase. Trans-Atlantic PRASM rose 2.5% but Pacific PRASM fell 2.6%.

"We are beginning to see the benefits of the changes we're implementing to our network and revenue management processes," said Jim Compton, chief revenue officer, in a prepared statement.

United's board authorized a $1 billion share repurchase program, which the company expects to complete within the next three years. The amount represents about 6% of United's market capitalization at Wednesday's close.

"I am encouraged by the solid progress we made in the second quarter," said CEO Jeff Smisek, in a prepared statement. "Our team is focused on improving our operations and service and on continuing to improve year-over-year revenue performance and cost control.

"The $1 billion share repurchase program we announced today demonstrates our progress and commitment to increasing value for our shareholders and the confidence we have in our plan," Smisek said.

On the cost side, consolidated cost per available seat mile excluding fuel, special charges, profit sharing and other expenses fell 0.2% as consolidated capacity fell by 0.1%.

The carrier generated $1.5 billion of operating cash flow in the second quarter of 2014 and earned a 10.3% return on invested capital for the 12 months ended June 30. UAL ended the second quarter with $6.8 billion in unrestricted liquidity.

Written by Ted Reed in Charlotte, N.C.

To contact this writer, click here.

Follow @tedreednc

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DAL $41.67 -2.78%
UAL $45.81 -4.68%
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs