United Airlines reports second-quarter 2016 performance


CHICAGO, IL – United Airlines today reported its second-quarter 2016 financial results.

“We made significant progress in the second quarter as a direct result of the passion and dedication that United’s aviation professionals around the world have for running a great airline,” said Oscar Munoz, president and chief executive officer of United Airlines. “This progress is exemplified by the best six months of operational performance in our history and we will continue down the path of unlocking United’s full potential.”

Second-Quarter Revenue

For the second quarter of 2016, total revenue was $9.4 billion, a decrease of 5.2 percent year-over-year. Second-quarter 2016 consolidated passenger revenue per available seat mile (PRASM) decreased 6.6 percent and consolidated yield decreased 6.1 percent compared to the second quarter of 2015. The decline in PRASM continues to be driven by factors including a strong U.S. dollar, lower surcharges, travel reductions from customers impacted by declining oil prices, competitive actions and higher-yielding demand not keeping pace with industry capacity.

Second-Quarter Costs

Total operating expense including special charges was $8.3 billion in the second quarter, down 1.6 percent year-over-year. Excluding special charges, total operating expense was $7.9 billion, a 6.1 percent decrease year-over-year. Consolidated unit cost (CASM) including special charges, third-party business expenses, fuel and profit sharing decreased 1.6 percent compared to the second quarter of 2015 due mainly to lower oil prices. Consolidated CASM, excluding special charges, third-party business expenses, fuel and profit sharing, increased 2.5 percent year-over-year driven largely by the impact of recently ratified labor agreements.

Liquidity and Capital Allocation

In the second quarter, UAL generated $2.5 billion in operating cash flow and ended the quarter with $6.0 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. The company continued to invest in its business through capital expenditures of $838 million in the second quarter. Including assets acquired through the issuance of debt and airport construction financing and excluding fully reimbursable projects, the company invested $767 million in adjusted capital expenditures during the second quarter. Free cash flow, measured as operating cash flow less adjusted capital expenditures, was $1.8 billion in the second quarter.

For the 12 months ended June 30, 2016, the company’s return on invested capital was 20.7 percent.

In the quarter, UAL repurchased $694 million worth of its common stock, representing 4.4 percent of shares outstanding. As of June 30, 2016, the company had $255 million remaining to purchase shares under its existing share repurchase programs.

UAL’s Board of Directors authorized an additional $2 billion share repurchase program. This amount represents approximately 13 percent of the company’s market capitalization as of the closing stock price on July 18, 2016.

For more information on UAL’s third-quarter 2016 guidance, please visit ir.united.com for the company’s investor update.

Second-Quarter Highlights

Operations and Employees

• Reached a tentative joint agreement with flight attendants.

• IAM-represented employees ratified agreements.

• Reported best six-month on-time performance and finished first or second in on-time arrivals among the four largest U.S. network carriers each month.

• Achieved best quarterly mishandled bag rate, keeping more customers connected with their bags than ever before.

• Employees earned cash-incentive payments of approximately $30 million for achieving operational performance goals.

Finance, Network and Fleet

• Outlined initiatives the company is implementing to improve financial performance including commercial enhancements, cost structure improvements and operational improvement expected to drive $3.1 billion in incremental value by 2018.

• Launched new international routes between San Francisco and Singapore and between San Francisco and Xi’an, China.

• Took delivery of two Boeing 737-800 aircraft, two Boeing 787-9 aircraft and added 12 Embraer 175 aircraft to its United Express fleet.

Customer Experience

• Achieved the greatest year-over-year customer satisfaction score improvement in the company’s history, up 6.7 points compared to the second quarter of 2015.

• Completed Wi-Fi installations on 100 percent of domestic and international mainline aircraft, making UAL the first U.S. airline to complete Wi-Fi installations on its international fleet.

• Unveiled a reimagined international travel experience – United Polaris business class.