December storms cost United $25 million

By Julie Johnsson
Posted Jan. 7 at 5:43 p.m.

December snowstorms that crippled air travel in Europe and along the Atlantic seaboard in the U.S. cost the parent company of United Airlines $25 million in consolidated passenger revenue, and will reduce fourth-quarter earnings by $10 million, the carrier said Friday.

Continental Airlines, which along with United is a subsidiary of United Continental Holdings Inc., was hit hard by the Boxing Day blizzards that brought operations to a halt at its hub at Newark Liberty International Airport and other greater New York area airports. More than 5,000 flights were canceled over a three-day stretch, stranding at least 750,000 travelers.

The new United is the first carrier to disclose the financial hit from the unusually severe weather, whose impact was magnified by tight capacity constraints that carriers have imposed over the past two years to control costs. United and Continental merged Oct. 1, but will continue to operate separately until they gain a single operating certificate from the Federal Aviation Administration.

The storms were a factor in the 1.6 percent dip in combined North American capacity totals for United and Continental, as well as a decline in the rate at which Continental completed its flights during December, said Michael Trevino, spokesman for the carrier.

Continental completed 96.8 percent of its flights in December, down from a 98.9 percent rate a year earlier. Completion rates rose 0.7 points to 97.9 percent for United, whose operations were little affected by the foul weather.

The new United said that its consolidated passenger revenue per available seat mile (PRASM) increased 7.5 percent to 8.5 percent compared to December 2009 results and that the measure of passenger revenues would have been higher if not for costs related to a new trans-Atlantic venture.

United will also absorb an accounting charge for the quarter as a result of a new immunized joint venture that allows it to divvy up revenues for North Atlantic flying with Star Alliance partners Air Canada and Lufthansa. Executives had earlier told analysts that they expected to pay $100 million into the pool shared by the airline partners because Continental had seen much greater profits from the virtual merger than it had forecast for the first nine months of 2010.

In December, the alliance partners enacted the new revenue-sharing plan, which they made retroactive to Jan. 1, 2010. The fourth-quarter accounting adjustment, which was booked entirely in the month of December, reduced the carrier’s PRASM by about 1 point, United said.

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One comment:

  1. Mike Jan. 11 at 6:46 pm

    Who Cares ?? only an idiot would fly united, friendly skies my *** !