United Airlines’ (United Continental Holdings: UAL) UAL stock is dipping after the airline told investors that bad weather will impact its earnings.
Capacity and passenger unit revenues in Q1 will be below previous expectations thanks to January and February winter storms, United told investors on Thursday.
UAL stock is down 2.5% pre-market.
“As a result of the severe weather, year-to-date, United has canceled more than 22,500 flights, the largest number of which (approximately 20,000) were regional flights. These cancellations were nearly four times the cancellations during the same period in 2013,” United said in an SEC filing.
Due to the severe weather, United’s combined January and February 2014 month-to-date regional completion factor is 87.1%, nearly 9 points lower than its mainline completion factor, an extraordinary low level. Due to the shorter stage length of regional flights, regional passenger revenue per available seat mile (“PRASM”) is typically almost twice as high as mainline domestic PRASM. Consequently, the reduction in regional flying has had a disproportionate effect on United’s consolidated PRASM. The weather-related cancellations to date have reduced first quarter 2014 consolidated PRASM by approximately 1.5 percentage points.
United Holdings also told investors that potential passengers are seemingly pushing back March travel into April — as cold weather lingers — which will also impact the second-quarter results.
UAL stock is still up 22% year to date.
