United Continental Holdings reports third quarter net income of $520 million excluding special charges, only $6 million with the charges

United Continental Holdings, Inc. (United Airlines) (Chicago) reported third-quarter 2012 net income of $520 million, or $1.35 per diluted share, excluding $514 million of net special charges. Including special charges, UAL reported third-quarter 2012 net income of $6 million, or $0.02 per diluted share.

UAL third-quarter consolidated passenger revenue decreased 2.6 percent year-over-year. Third-quarter consolidated passenger revenue per available seat mile (PRASM) decreased 1.3 percent compared to the same period in 2011.
Consolidated unit costs (CASM) holding fuel rate and profit sharing constant and excluding special charges and third-party business expense increased 2.5 percent year-over-year on a consolidated capacity reduction of 1.4 percent. Third-quarter consolidated CASM increased 6.6 percent year-over-year.
UAL ended the third quarter with $7.2 billion in unrestricted liquidity.

Third-Quarter Revenue and Capacity

For the third quarter of 2012, total revenue was $9.9 billion, a decrease of 2.6 percent year-over-year. Third-quarter consolidated passenger revenue decreased 2.6 percent to $8.8 billion, compared to the same period in 2011.

Consolidated revenue passenger miles (RPMs) decreased 1.5 percent on a consolidated capacity (available seat miles) decrease of 1.4 percent year-over-year for the third quarter, resulting in a third-quarter consolidated load factor of 85.2 percent.

Consolidated yield for the third quarter of 2012 decreased 1.2 percent year-over-year. Third-quarter 2012 consolidated PRASM decreased 1.3 percent compared to the same period in 2011.

Mainline RPMs in the third quarter of 2012 decreased 1.9 percent on a mainline capacity decrease of 1.4 percent year-over-year, resulting in a third-quarter mainline load factor of 85.7 percent. Mainline yield for the third quarter of 2012 decreased 1.5 percent compared to the same period in 2011. Third-quarter 2012 mainline PRASM decreased 2.0 percent year-over-year.

Passenger revenue for the third quarter of 2012 and period-to-period comparisons of related statistics for UAL’s mainline and regional operations are as follows:

	3Q 2012 Passenger Revenue (millions)	Passenger Revenue vs. 3Q 2011	PRASM vs. 3Q 2011	Yield vs. 3Q 2011	Available Seat Miles vs. 3Q 2011

Domestic	$3,325	(5.8%)	(4.2%)	(2.6%)	(1.7%)

Atlantic	1,591	(8.0%)	(4.5%)	(3.7%)	(3.7%)
Pacific	1,450	11.0%	9.9%	7.2%	1.0%
Latin America	627	(6.8%)	(8.3%)	(9.4%)	1.6%
International	3,668	(1.1%)	0.0%	(0.7%)	(1.1%)

Mainline	6,993	(3.4%)	(2.0%)	(1.5%)	(1.4%)
Regional	1,781	0.5%	1.6%	(0.9%)	(1.1%)

Consolidated	$8,774	(2.6%)	(1.3%)	(1.2%)	(1.4%)

Year-over-year cargo and other revenue in the third quarter of 2012 decreased 2.3 percent, or $27 million, to $1.1 billion.

Third-Quarter Costs

Total operating expenses, including special charges, increased $473 million, or 5.1 percent, in the third quarter compared to the same period of 2011. Third-quarter 2012 operating expenses, excluding fuel, profit sharing, special charges and third-party business expense, increased $92 million, or 1.7 percent, year-over-year. Third-party business expense was $55 million in the third quarter.

Both consolidated and mainline CASM, excluding special charges and third-party business expense, increased 2.3 percent in the third quarter of 2012 compared to the same period of 2011. Third-quarter consolidated and mainline CASM, including special charges, increased 6.6 and 7.5 percent year-over-year, respectively.

In the third quarter, consolidated and mainline CASM, excluding special charges and third-party business expense and holding fuel rate and profit sharing constant, increased 2.5 percent and 2.0 percent, respectively, compared to the results for the same period of 2011.

Third-Quarter Liquidity and Return on Invested Capital

UAL ended the third quarter with $7.2 billion in unrestricted liquidity, including $500 million of undrawn commitments under a revolving credit facility. During the third quarter, the company had gross capital expenditures of $412 million. The company made debt and principal payments under capital lease of $487 million including $104 million of prepayments in the third quarter. The company’s return on invested capital for the 12 months ended Sept. 30, 2012, was 9.3 percent, below the company’s goal of a 10 percent return over the business cycle.

Third-Quarter 2012 Events

United recorded a U.S. Department of Transportation domestic on-time arrival rate of 72.4 percent and a system completion factor of 98.6 percent for the quarter. For international flights, United recorded an on-time arrival rate of 71.0 percent. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
On Aug. 2, the company reached an agreement in principle for a joint collective bargaining agreement with the Air Line Pilots Association representing pilots from the company’s United and Continental subsidiaries. Flight attendants from the company’s Continental and Continental Micronesia subsidiaries ratified new labor agreements, and the company began the joint collective bargaining process with the Association of Flight Attendants, which represents all flight attendants. The company and the International Association of Machinists announced that they would engage in expedited joint collective bargaining agreement negotiations for fleet service employees, passenger service employees and certain other work groups. The company is also in the process of commencing joint negotiations with the International Brotherhood of Teamsters, which represents maintenance technicians.
United employees earned cash incentive payments totaling $5 million for exceeding 80 percent domestic on-time arrival performance for the month of September.
United took delivery of its first Boeing 787. United is the first North American carrier to take delivery of the 787, and the aircraft is the first of five new Dreamliners the airline expects to receive this year from its total order for 50 of the aircraft.
United announced routes for its Boeing 787 aircraft, in addition to the previously announced service from its Denver hub to Tokyo Narita, including service between its Houston hub and Lagos, Nigeria, and from its Los Angeles hub to Tokyo Narita and Shanghai. The airline will also operate Dreamliner service from its Houston hub to Amsterdam and London Heathrow on a temporary basis.
The company announced an order to purchase 150 narrowbody Boeing 737 aircraft, including 100 Boeing 737 MAX 9 aircraft and 50 Boeing 737-900ER aircraft for delivery between 2013 and 2022. These new aircraft will allow United to replace older, less-efficient aircraft to reduce fuel and operating costs, enhance the customer experience and maximize network opportunities.
During the quarter, United launched service from Newark to Istanbul. In addition, the carrier launched service from San Francisco to Raleigh-Durham, N.C., from Denver to Shreveport, La., and from Newark to Columbia, S.C. United also announced 12 new routes during the quarter, including flights from its San Francisco hub to Taipei, Taiwan, and Paris, as well as from Washington, D.C. to San Salvador, from Cleveland to Nashville and from Chicago to Monterrey, Mexico, Thunder Bay, Canada, and Nassau, Bahamas.
Emphasizing the importance of service and reliability, United awarded new Ford vehicles to 11 employees for their perfect attendance. Thousands of employees were eligible, and United selected the winners during a random drawing.
United now has 180 airplanes featuring DIRECTV®, offering customers more live television access than any other airline in the world.
United Economy Plus seating is now on 90 percent of United’s entire mainline fleet, and the company continues to install flat-bed seats in premium cabins on its international fleet. United now has 159 aircraft featuring flat-bed seats, more than any other U.S. carrier.
United launched its MileagePlus Digital Media Store, a first-of-its-kind in the airline industry, giving MileagePlus members the opportunity to use miles for music tracks, albums and movies.