United’s momentum continues: 2014 net profit up 98% to $1.13 billion

United 787-8 (34829/77) N26906 arrives at Los Angeles International Airport (LAX/KLAX) on December 12, 2013.

(Photo by Michael Carter)

United Airlines parent United Continental Holdings posted 2014 net income of $1.13 billion, up 98% over a $571 million net profit in 2013, as the Chicago-based company appears to finally have serious earnings momentum after several years of financial and operational struggles.

“We improved our operation meaningfully throughout 2014,” chairman, president and CEO Jeff Smisek told analysts and reporters Thursday, noting that he expects the company to achieve even “far better results” in 2015. United’s mainline capacity increased just 0.5% year-over-year in 2014 and Smisek said the airline will maintain capacity discipline going forward even as profits rise and fuel prices decrease.

“We will only grow the airline as demand dictates,” he said. “United will continue its discipline, growing capacity less than GDP regardless of the price of oil … We’re going to run the airline for profit maximization and we’re very focused on capacity discipline.”

Smisek added that he did not know whether other US airlines would be able to resist growing capacity. “We can only speak to United,” he said. “We will absolutely not lose our capacity discipline.”

United did take a $237 million loss related to fuel hedging in the 2014 fourth quarter and expects a $190 million fuel hedging hit in the 2015 first quarter. But CFO John Rainey said United is set up to “participate 84% in future declines of the price of oil” beyond the March quarter.

United will take delivery of 11 Boeing 787-9s in 2015 and believes the aircraft will contribute to achieving its goal of a 7.3% increase in the airline’s overall fuel efficiency in 2017 compared to 2013.

United’s 2014 revenue increased 1.6% year-over-year to $38.9 billion, but expenses decreased 1.4% to $36.53 billion, producing a $2.37 billion operating profit, up 90% over operating income of $1.25 billion in the 2013 December quarter.

United’s 2014 mainline traffic increased 0.2% to 179.02 billion RPMs on a 0.5% rise in capacity to 214.12 billion ASMs, producing a load factor of 83.6%, down 0.2 point. Mainline passenger yield improved 2.7% to 14.96 cents.

(Aaron Karp - ATWOnline News)