United Continental November Traffic Down, Domestic Soft
United Continental Holdings Inc. (UAL), the parent company of United Airlines, reported a marginal dip in its Nov 2014 traffic due to a fall in domestic travel. Consolidated airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – declined 0.3% year over year to 19.28 billion.
The carrier’s domestic traffic declined 3.7% year over year in the month of November. However, traffic on the international front improved 3.6%. Growth in Latin American traffic offset decline in the Atlantic division.
Consolidated capacity (or available seat miles/ASMs) for the month came in at 19.13 billion, down 0.4% from Nov 2013, hurt by domestic weakness. The load factor (percentage of seats filled by passengers) improved to 79.9% from 79.8%, in the same month last year. The company registered a completion factor of 99.3%, with nearly 80.6% of flights on schedule.
During the first eleven months of 2014, United Continental generated RPMs of 188.67 billion (up 0.2% year over year) and ASMs of 225.8 billion (up 0.1% year over year), leading to a load factor of 83.6% (up 10 basis points). United Continental was not the only carrier to come out with November traffic report: peers Southwest Airlines (LUV) and American Airlines Group (AAL) also reported traffic data for the month. While Southwest’s numbers were encouraging, the data released by American Airlines turned out to be disappointing.
Though disappointed by United Continental’s soft November traffic, we are optimistic about the company’s efforts to expand by adding more flights. Moreover, United Continental, like many of its peers, continues to benefit from weak oil prices.
Zacks Rank
United Continental currently carries a Zacks Rank #3 (Hold). A better ranked stock in the airline space is Alaska Air Group, Inc. (ALK), sporting a Zacks Rank # 1 (Strong Buy).
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