Low Oil Prices Aren’t Always Great for United

Including special items, UAL reported fourth-quarter net income of $823 million. Analysts were expecting UAL to report earnings per share of $2.59 during its fourth quarter. Finally, ICON Advisers raised its stake in shares of United Continental Holdings by 5.0% in the third quarter. That has weighed on the average revenue airlines are able to get from each passenger, a closely watched measure of industry financial health. Southwest, which has a big operation at Houston’s Hobby Airport, said it hadn’t suffered a falloff in demand in energy-heavy markets.

“What’s concerning to us is the oil sector, frankly”, Hackel said. But he said that the airline felt it was “in a different world” from some rivals. “With oil under $30 now, we’re concerned about that part of the business for United”.

According to data from Hopper.com, the average round trip in the USA runs $210 for January 2016, a three-year low, and down 14% compared to the same month a year ago.

United is beefing up travel to East Coast business markets from Denver and San Francisco.

United’s consolidated load factor increased by a percentage point to 82.7 percent, a combination of a 3.1 percent increase in traffic and a 1.8 percent increase in capacity. During the same quarter in the previous year, the company posted $1.20 EPS.

In the second half of the year, United will follow up with an “entry-level fare that will appeal to the purely price-sensitive customer”, Compton said. Deutsche Bank raised their price target on United Continental Holdings from $74.00 to $75.00 and gave the company a buy rating in a research note on Monday, December 21st. The company meanwhile said it reached a deal to buy 40 new Boeing 737-700 aircraft, which will enter the fleet beginning in mid-2017, replacing a portion of the capacity now operated by regional partners.

Cheap fuel has allowed the airlines to reward shareholders with stock buybacks and dividends, and to thank workers with profit sharing.

USA airlines are phasing out many smaller planes in favor of larger models that offer lower costs and more opportunities to generate revenue from services such as in-flight meals and entertainment. They’re also buying planes to update their fleets.

For the year, United reported $4.2 billion in pre-tax income, its highest ever. The airline has been plagued by technology outages and flight delays. Yet fuel costs were so low that the carrier took in record profits anyway.

Munoz has been on medical leave since suffering a heart attack in October with Brett Hart taking over as interim CEO until his return.

In addition, United said it will buy back $750 million in shares during the first quarter, and Southwest will buy back $500 million in stock. The airline intends to repurchase an additional $500 million in shares in a buyback program.

Net earnings came in at $934 million. Per-share earnings rose to $2.24 from 7 cents. The company reported a miss on analysts’ estimates for both earnings per share (EPS) and revenues for the quarter. This number is scaled on a 1 to 5 basis with 1 representing a “Strong Buy” and 5 a “Strong Sell” recommendation.

Anne Steele contributed to this article.