United Continental Holdings projects a revenue drop, as over 22 500 flights have been cancelled

March 2, 2014 12:30 pm

Shares of United Continental Holdings Inc. (UAL) tumbled after the company projected a key revenue indicator may decrease during the first quarter, as severe weather has led to the cancellation of over 22 500 flights.

Revenue for each seat flown per mile is expected to drop by 0.5% to 2.5% in comparison with a year ago across all of the company’s operations. In January the carrier had forecast that consolidated unit revenue for Q1 would be unchanged or would increase by 2%. Shares of United Continental Holdings dropped 3.33% to reach $44.96 on February 28th on the New York Stock Exchange.

Kevin Crissey, an analyst at Skyline Research LLC, said such figures were an “ugly outcome” and revised his estimate that the company may register a loss of $1.46 per share during the current quarter from 62 cents per share previously.

“That is a huge hole from which the company needs to climb to have a good annual result”, he wrote in a note to investors, cited by Bloomberg News.

Winter storms, that hit regions such as New York, Atlanta and Chicago during the recent months, caused the cancellation of thousands of flights and adversely influenced travelling plans of millions. Severe weather across the East Coast on February 13th wiped out almost 7 600 flights, or a larger number compared to that on the worst day of Hurricane Sandy in 2012, according to figures by data provider MasFlight.

United Continental Holdings’ “weather impact will exceed that of American and Delta, driven by the fact that Chicago’s storm activity resulted in several consecutive days of cancellations,” Jamie Baker, a JPMorgan Chase & Co. analyst in New York, said in a note, as reported by the same media.

A significantly increased number of flights cancelled may prompt business customers to simply put off a trip, while vacation travelers probably stuck to their plans during one-day obstructions elsewhere, according to the note.

Winter storms in January and February trimmed the amount of completed regional flights to 87.1%, or “an extraordinarily low level,” according to United.

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