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United Continental’s Traffic & Load Factor Rise in August


United Continental Holdings, Inc.’s UAL wholly owned subsidiary, United Airlines, reported strong traffic figures for August. Consolidated traffic, measured in revenue passenger miles (RPMs), was 21.99 billion, up 7.8% from the year-ago figure.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 5.4% to 25.20 billion. Also, load factor (percentage of seats occupied by passengers) expanded 200 basis points (bps) to 87.3% as traffic growth outpaced capacity expansion. Notably, this is the fourth straight month of load factor increase at the carrier. In May, June and July, load factor increased 200 bps, 250 bps and 240 bps, respectively. A higher load factor is always beneficial for airline companies as it implies the spread of heavy fixed costs across more passengers.

At the end of the first eight months of 2018, the carrier registered 6.1% increase in RPMs to 154.79 billion while ASMs climbed 4.4% to 183.64 billion both on a year-over-year basis. Consequently, load factor inched up 140 bps to 84.3%. The company posted an on-time performance of 59.9% and a completion factor of 98.8% for August.

United Continental Holdings, Inc. Price

United Continental Holdings, Inc. Price | United Continental Holdings, Inc. Quote

The buoyant scenario is further highlighted by the carrier’s bullish projections for the third quarter of 2018 at the Cowen and Company’s 11th Annual Global Transportation Conference on Sep 5. The carrier now anticipates third-quarter consolidated passenger unit revenues at the high end of the guided range of 4-6% increase. In the year-ago quarter, the metric was down 3.7% year over year. (Read more: United Continental Q3 View Upbeat Despite Fuel Cost Headwind)

Zacks Rank & Key Picks

United Continental carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc SKYW, C.H. Robinson Worldwide, Inc. CHRW and Trinity Industries, Inc. TRN. While C.H. Robinson holds a Zacks Rank #2 (Buy), SkyWest and Trinity sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of SkyWest, C.H. Robinson and Trinity have rallied more than 65%, 37% and 22%, respectively, in a year.

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