United Airlines (UAL) today reported full-year 2014 net income of $1.97 billion, an increase of 89 percent year-over-year, or $5.06 per diluted share, excluding $834 million of special items. Including special items, UAL reported full-year net income of $1.13 billion, or $2.93 per diluted share. UAL reported fourth-quarter 2014 net income of $461 million, an increase of 86 percent year-over-year, or $1.20 per diluted share, excluding $433 million of special items. Including special items, UAL reported fourth-quarter 2014 net income of $28 million, or $0.07 per diluted share.
- UAL earned a 12.9 percent return on invested capital in 2014.
- United’s consolidated passenger revenue per available seat mile (PRASM) increased 1.6 percent for full-year 2014 compared to full-year 2013.
- Full-year 2014 consolidated unit costs (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, increased 1.3 percent year-over-year on a consolidated capacity increase of 0.3 percent. Full-year 2014 CASM, including those items, decreased 1.6 percent year-over-year.
- In 2014, United returned approximately $320 million to shareholders as part of its previously announced $1 billion share buyback program. In addition, throughout the year, United spent $310 million to retire convertible debt that was convertible into approximately 5.8 million shares of UAL common stock.
- Employees earned $235 million in profit sharing for full-year 2014, which will be distributed on Feb. 13.
- UAL ended the year with $5.7 billion in unrestricted liquidity.
„Thanks to the good work of the United team, we reported a $2 billion profit for 2014, excluding special items,” said Jeff Smisek, UAL’s chairman, president and chief executive officer. „We’re starting 2015 as a better airline, and we expect to generate far better results. I’m excited about what we will do this year to improve our operations, our product, and our customer service, focusing on growing our core earnings and margins. For the first quarter, we expect our pre-tax margin to be between 5 and 7 percent, excluding special items.”
Fourth-Quarter Revenue and Capacity
For the fourth quarter of 2014, total revenue was $9.3 billion, a decrease of 0.2 percent year-over-year. Fourth-quarter consolidated passenger revenue increased 1.3 percent to $8.1 billion, compared to the same period in 2013. Ancillary revenue per passenger in the fourth quarter increased 9.7 percent year-over-year to more than $22 per passenger.
Fourth-quarter cargo revenue grew 18.2 percent to $260 million driven by higher volumes year-over-year, as cargo traffic recovered from the prior year’s lower bookings. Other revenue in the fourth quarter decreased 14.3 percent year-over-year to $970 million mostly due to the company choosing to discontinue an agreement to sell fuel to a third party. The corresponding expense decline appears in third-party business expense.
Consolidated revenue passenger miles increased 0.1 percent and consolidated available seat miles increased 0.9 percent year-over-year for the fourth quarter, resulting in a fourth-quarter consolidated load factor of 81.7 percent.
Fourth-quarter 2014 consolidated PRASM increased 0.4 percent and consolidated yield increased 1.3 percent compared to the fourth quarter of 2013.
Fourth-quarter consolidated CASM, excluding special charges, third-party business expense, fuel and profit sharing, increased 1.2 percent compared to the fourth quarter of 2013. Fourth-quarter consolidated CASM including those items decreased 5.3 percent.
Fourth-quarter total operating expenses, excluding special charges, decreased $420 million, or 4.7 percent, year-over-year. Including special charges, total operating expenses decreased $406 million, or 4.5 percent, in the fourth quarter versus the same period in 2013.
Fourth-Quarter Liquidity and Cash Flow
UAL ended the fourth quarter with $5.7 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the fourth quarter, the company had gross capital expenditures of $1 billion, excluding fully reimbursable projects. The company made debt and capital lease principal payments of $534 million in the fourth quarter, including prepayment of $248 million of convertible debt that was convertible into approximately 4.3 million shares of United common stock.
As part of United’s $1 billion share buyback program, the company spent approximately $100 million in share repurchases in the fourth quarter. For the year, United returned a total of approximately $320 million to shareholders through share repurchases and open market transactions. In addition, for the year the company spent $310 million to retire convertible debt that was convertible into approximately 5.8 million shares.
For the 12 months ended Dec. 31, 2014, the company’s return on invested capital was 12.9 percent.
„In 2014 we made significant progress towards creating long-term value for our investors while providing a better experience for our customers,“ said John Rainey, UAL’s executive vice president and chief financial officer. „Our solid cost performance in 2014 was driven by executing on our Project Quality efficiency initiatives. As our cost initiatives mature throughout 2015, we anticipate that 2015 consolidated CASM, excluding fuel and third-party business expense, will be approximately flat.”
For more information on United’s first-quarter 2015 guidance, please visit ir.united.com for the company’s investor update.