NEW YORK (Reuters) - Investors remained skittish on United Continental Holdings Inc (UAL.N) stock on Wednesday, even as company executives sought to reassure the doubtful on its expected performance for the year.
Following the after-market release of fourth-quarter and full-year data on Tuesday that showed better-than-initially-projected results, United company executives on Wednesday told investors that the late end of 2016 saw the company set “new all-time records” in nearly all of its operating metrics and revenue environment improvements had set the stage for key metric success in 2017.
“It sure feels like the revenue environment turned a corner in the fourth quarter and assuming that continues, we are looking forward to positive (passenger unit revenue) for 2017,” United President Scott Kirby said on the conference call that included investors and members of the media.
The Chicago-based carrier’s shares fell in after-market trading on Tuesday following the results and continued to slip - down 0.1 percent in afternoon trading on Wednesday - in a sign that investors were underwhelmed by its slower progress compared to competitors, according to CFRA analyst Jim Corridore.
“Even though United beat their earlier guidance on unit revenue, they’re still lagging peers relatively badly,” Corridore said in a phone interview. “Some of us would have liked to see more progress.”
United, the No. 3 U.S. airline by passenger traffic, posted a fourth quarter passenger unit revenue decline of 1.6 percent and a pretax profit margin excluding special items of 9.5 percent, beating initial expectations on the measure.
For the first quarter of 2017, United said it expected a 1 percent decrease to a 1 percent increase in passenger unit revenue, a closely watched metric which measures sales relative to flight capacity.
Rival airline Delta, the No. 2 carrier by passenger traffic, last week posted a fourth-quarter decline in passenger unit revenue of 2.7 percent and predicted a flat to 2 percent increase in the measure in the first quarter of 2017.
Positive unit revenue from U.S. carriers would be a turnaround from a two-year streak of negative performance that has plagued much of the industry.
Upticks in unit revenue are a positive sign for investors in a sector that has for years been battered by cheaper fares and increased competition.
“The industry as a whole is very focused on getting unit revenues moving in the right direction again,” Corridore said. “They all seem to be moving in the right direction.”
Reporting by Alana Wise; Editing by Bernard Orr