United Continental Holdings, Inc. Announces First-Quarter 2011 Results

CHICAGO, April 21, 2011 /PRNewswire via COMTEX/ —

United Continental Holdings, Inc. (NYSE: UAL) today announced first-quarter 2011 financial results. UAL results for the first quarter include the financial results of its two operating subsidiaries, United Airlines and Continental Airlines. Prior to the merger on Oct. 1, 2010, UAL results included only the financial results of United Airlines. Pro forma results that consolidate the financial results for Continental for first-quarter 2010 are included for meaningful year-over-year comparisons.

UAL reported a first-quarter 2011 net loss of $136 million or $0.41 loss per share excluding $77 million of special charges consisting primarily of integration-related costs, an improvement of $47 million compared to the pro forma results year-over-year. On a GAAP basis, UAL reported a first-quarter 2011 net loss of $213 million or $0.65 loss per share.

UAL consolidated passenger revenue increased 11.5 percent in the first quarter of 2011 compared to the pro forma results for the same period in 2010. First-quarter 2011 consolidated passenger revenue per available seat mile (PRASM) increased 9.9 percent compared to the pro forma results year-over-year.

Rising fuel prices largely offset the improvement in revenue. First-quarter 2011 consolidated fuel expense, excluding the impact of hedges, increased 34.5 percent, or $725 million, year-over-year on a pro forma basis.

UAL ended the quarter with $8.9 billion in unrestricted cash, cash equivalents and short-term investments.

“My co-workers did a great job running an on-time and efficient operation this past quarter, and I especially want to thank my co-workers who conducted our Japan operations, overcoming tremendous personal hardship to help our customers and keep our operation safe and reliable after the tragic earthquake and tsunami,” said Jeff Smisek, UAL’s president and chief executive officer. “With our people, and the power of our network, product and fleet, United and Continental are much better positioned to manage through the current high-cost fuel environment as a combined carrier than either would have been as stand-alone carriers.”

First-Quarter Revenue and Capacity

For the first quarter of 2011, total revenue was $8.2 billion, an increase of 10.8 percent compared to the pro forma results for the same period in 2010. Consolidated passenger revenue for the first quarter rose 11.5 percent to $7.2 billion, as compared to the pro forma results for the same period in 2010.

Consolidated revenue passenger miles (RPMs) for the first quarter of 2011 decreased 1.0 percent on a pro forma basis, while capacity (available seat miles or ASMs) increased 1.4 percent year-over-year on a pro forma basis, resulting in a first-quarter consolidated load factor of 78.0 percent.

Consolidated yield for the first quarter of 2011 increased 12.7 percent year-over-year on a pro forma basis. First-quarter 2011 consolidated PRASM increased 9.9 percent compared to the pro forma results for the same period in 2010.

Mainline RPMs in the first quarter of 2011 decreased 1.0 percent on a mainline capacity increase of 1.5 percent year-over-year on a pro forma basis, resulting in a first-quarter mainline load factor of 78.8 percent. Mainline yield for the first quarter of 2011 increased 13.0 percent over the pro forma results for the same period in 2010. First-quarter 2011 mainline PRASM increased 10.2 percent year-over-year on a pro forma basis.

“Our strong revenue performance is a result of my co-workers’ focus on operational performance and delivering products and services our customers value,” said Jim Compton, UAL’s executive vice president and chief revenue officer. “We will continue to focus on growing revenue by tailoring our products to meet our customers’ needs.”

Due to the decline in demand for travel to Japan following the March 11, 2011, earthquake and tsunami, first-quarter consolidated passenger revenue decreased approximately $30 million. In response, UAL reduced trans-Pacific capacity to Japan by approximately 10 percent in April and 14 percent in May, compared to the same periods in 2010.

Cargo and other revenue in the first quarter of 2011 increased 6.3 percent, or $60 million, year-over-year on a pro forma basis driven by increased cargo fuel surcharges and continued growth in ancillary revenue.

First-Quarter Costs

Total consolidated expenses increased $825 million, or 11.2 percent, compared to the pro forma results for the first quarter of 2010, of which $725 million was due to higher fuel costs, excluding the impact of fuel hedges. First-quarter 2011 consolidated expenses, excluding fuel, profit-sharing and special items, increased $187 million, or 3.6 percent, year-over-year on a pro forma basis on 1.4 percent higher capacity.

Consolidated costs per available seat mile (CASM), excluding special items, increased 8.6 percent and mainline CASM, excluding special items, increased 8.2 percent in the first quarter of 2011 compared to the pro forma results for the same period last year. First-quarter 2011 consolidated and mainline CASM increased 9.6 and 9.4 percent year-over-year on a pro forma basis, respectively.

On a pro forma basis, consolidated fuel prices, excluding the impact of hedges, for the first quarter of 2011 increased 34.5 percent compared to the first quarter of 2010. The company has hedged approximately 46 percent of its expected remaining fuel needs for 2011.

In response to rising fuel prices, the company announced capacity reductions resulting in a one percentage-point reduction in consolidated ASMs effective with its May 2011 schedule and a four percentage-point reduction of consolidated ASMs effective with its September 2011 schedule compared to previous plans. Full-year 2011 consolidated capacity is now expected to be roughly flat year-over-year.

In the first quarter, consolidated and mainline CASM, excluding special items and holding fuel rate and profit sharing constant, increased 1.5 percent and 1.6 percent, respectively, compared to the pro forma results for the same period of 2010.

“The whole team did a good job controlling costs while running a great operation despite significant challenges this quarter,” said Zane Rowe, UAL’s executive vice president and chief financial officer. “We will continue to improve our cost performance and focus on further operational efficiencies.”

First-Quarter Liquidity

UAL ended the first quarter of 2011 with $8.9 billion in unrestricted cash, cash equivalents and short-term investments, including approximately $200 million of counterparty hedge collateral posted with the company. During the first quarter, the company generated $1 billion of operating cash flow and had gross capital expenditures of $268 million. The company made scheduled debt and net capital lease payments of $459 million, including the $150 million UAL 5% convertible notes, and prepaid $194 million of debt.

Merger Integration

While United and Continental continued to operate as two separate airlines, the company made progress toward integrating products, services and policies during the quarter. The company announced that it will retain United’s Economy Plus seating and expand it to Continental aircraft beginning in 2012. It also unveiled a new interim advertising campaign that began to roll out at airports, through customer communications and other media. The carriers’ check-in, ticket counter and gate facilities are now co-located at 36 airports, and more than 30 percent of the total fleet, or 460 aircraft, including the first Boeing 747-400, are now repainted in the new United livery. The company remained focused on building its Working Together culture to ensure that employees share in the success they help create. During the quarter, United introduced the 2011 Go Forward Plan that outlines the company’s most important goals for the year, and new perfect-attendance, profit-sharing and pass-travel programs for employees.

Notable First-Quarter 2011 Accomplishments

United and Continental delivered solid operational results during the quarter, despite being impacted by winter snow storms in several hubs. United and Continental recorded U.S. Department of Transportation domestic on-time arrival rates of 82.7 percent and 76.6 percent, respectively, and completion factors of 97.9 percent and 97.6 percent, respectively, for the first quarter. For international flights, United and Continental recorded on-time arrival rates of 81.4 percent and 78.8 percent respectively. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.

Employees of the combined company earned cash incentive payments for operational performance totaling $18 million during the first quarter of 2011.

The company reached a tentative agreement with the International Brotherhood of Teamsters representing United’s maintenance technicians and related employees, and reached consensus with Continental’s passenger service airport and reservation agents on improvements to pay, benefits and work rules.

Customers and employees donated more than $2.5 million to the American Red Cross and Mileage Plus® and OnePass® members gave more than 63 million frequent flyer miles to the charity through the airlines’ programs to help those affected by the Japan earthquake.

The company inaugurated nonstop flights between New York/Newark and Providenciales, Turks and Caicos Islands. In addition, the company announced new service beginning June 2011 between New York/Newark and Stuttgart, Germany, and Port-au-Prince, Haiti, and between San Francisco and Guadalajara, Mexico. Daily service between Los Angeles and Guadalajara, Mexico, is scheduled to begin in May 2011.

The company continued to install flat-bed seats in first and business class and now has the new seats on 118 United and Continental aircraft, more than any other U.S. carrier.

The company signed a letter of intent to offer Wi-Fi on more than 200 Continental Boeing 737 and 757 aircraft through our partnership with LiveTV. United currently offers Wi-Fi on all p.s.® flights between New York Kennedy and Los Angeles and San Francisco.

Continental placed into service two new fuel-efficient Boeing 737-800s and removed from service two older, less efficient Boeing 737-500s.

About United Continental Holdings, Inc.

United Continental Holdings, Inc. (NYSE: UAL) is the holding company for both United Airlines and Continental Airlines. Together with United Express, Continental Express and Continental Connection, these airlines operate an average of 5,820 flights a day to 373 airports on six continents from their hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark Liberty, San Francisco, Tokyo and Washington, D.C. United and Continental are members of Star Alliance, which offers 21,000 daily flights to 1,160 airports in 181 countries worldwide through its 27 member airlines. United and Continental’s more than 80,000 employees reside in every U.S. state and in many countries around the world.For more information about United Continental Holdings, Inc., go to unitedcontinentalholdings.com. For more information about the airlines, see united.com and continental.com, and follow each company on Twitter and Facebook.