The airline’s pretax margin was raised from 16% to 17%, largely the result of an estimated 1.5% decline in United Continental’s cost per available seat mile from $0.0911 to $0.0906. That cost includes fuel. There were no changes to the company’s estimated fuel consumption (1.035 billion gallons in the third quarter) or its all-inclusive price for jet fuel ($1.97 a gallon).
Passenger revenue per available seat mile is now estimated at $0.134, down slightly from the prior guidance of $0.1347. But traffic as measured by revenue passenger miles are now estimated to rise 4% in the third quarter, and total consolidated traffic (domestic and international, mainline and regional) is now forecast to rise 2% to more than 57 billion.
In its filing with the U.S. Securities and Exchange Commission Friday morning, United Continental noted some positives for its third-quarter results:
- Passenger Revenue: Third-quarter 2015 passenger revenue performance year-over-year was primarily impacted by a strong U.S. dollar, lower surcharges, travel reductions from energy dependent corporate customers and a softening in domestic yields.
- Other Revenue: Other revenue performed better than expected in the third quarter, largely driven by approximately $100 million from the combined impact of the amended co-branded card marketing services agreement with Chase Bank USA, N.A., the related amendments to the agreements with Visa U.S.A., Inc., JPMorgan Chase Bank, N.A. and Paymentech LLC, and updated assumptions for accounting purposes.
- Non-Fuel Expense: In the third quarter, the strong U.S. dollar contributed to 1 point of unit cost benefit. The Company’s third-quarter non-fuel unit cost was better than original guidance due to higher than expected consolidated capacity, timing of certain expense items and better-than-expected performance in its Project Quality efficiency program.
ALSO READ: 3 Top Airline Stocks to Buy Now as Jet Fuel Prices Continue Plunge
United Continental’s stock was up more than 7.2% in mid-morning trading, at $56.01 in a 52-week range of $39.46 to $74.52. The consensus price target on the shares is $78.47.
Other U.S. carriers also got a boost from United’s report. JetBlue Airways Corp. (NASDAQ: JBLU) was up about 4.8%, at $26.48 in a 52-week range of $9.38 to $27.36.
Spirit Airlines Inc. (NASDAQ: SAVE) was up about 4.5%, at $50.97 in a 52-week range of $45.75 to $85.35, and American Airlines Group Inc. (NASDAQ: AAL) was up more than 4%, at $41.35 in a 52-week range of $28.10 to $56.20.
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