The good news continued Thursday for the US airline industry as United Continental Holdings (UCH), parent of merger partners United Airlines (UA) and Continental Airlines (CO), reported 2011 net income of $840 million.
That was down 12% from a pro forma net profit of $955 million in 2010, but the impressive result is another sign that US airlines have been able to mostly offset steep rises in fuel costs with robust revenue performances and capacity discipline. UCH’s full-year 2011 revenue grew 8.8% year-over-year on a pro forma basis to $37.11 billion while expenses lifted 9.6% to $35.29 billion, producing an operating profit of $1.82 billion, down 5.1%. The company’s full-year 2011 aircraft fuel costs increased by 29.5% to $12.38 billion.
President and CEO Jeff Smisek said that “2012 is the year we will become one airline” with 75% of expected merger synergies achieved by year end. The airline plans to put five Boeing 787s into service in the second half of 2012 and this year will take delivery of 19 737-900ERs.
CFO Zane Rowe said UCH achieved $400 million in merger synergies in 2011, slightly more than expected. The synergies were comprised of $250 million in enhanced revenue and $150 million in cost savings.
UCH did incur a fourth-quarter net loss of $138 million owing mostly to special charges of around $170 million related to the integration of UA and CO. The loss was narrowed from a pro forma net deficit of $325 million in the 2010 December quarter.
UCH’s full-year 2011 mainline traffic decreased by 1.5% year-over-year on a pro forma basis to 181.76 billion RPMs. Capacity was down 0.3% to 219.44 billion ASMs and load factor was 82.8%, down 1.1 points. Passenger yield rose 10.4% to 14.29 cents.