MIAMI — United Airlines reported a $857 million pre-tax profit for the fourth quarter (Q4) of 2016 this morning, down just 2.3% year-over-year. Net profit after tax for the quarter was much lower at $397 million, down a more alarming 51.8% thanks to the massive increase in United’s tax bill.

Revenue for the fourth quarter actually grew slightly by 0.2% YOY to $9.05 billion, but was still down 3.5% YOY for the full year to $35.6 billion. Operating expenses rose 1.2% in Q4 due to labor costs, but were down 1.5% YOY for the full year. And the all important PRASM metric was down 1.6%, still bad but much better compared to Q1-Q3 of this year.,

Our senior business analyst Vinay Bhaskara live blogged the earnings call this morning via the Reply All tool. His ending takeaway from the call was:

Overall Q4 was pretty solid for United, but there are some worrisome signs and trends in the guidance for Q1 2017. Single digit margins, even with United’s Q1 seasonality is a worrisome sign in this profit environment (though I’m sure United shareholders in 2006 would have killed for high single digits on that metric). The headline PRASM and capacity projections are pretty reasonable, with 1-2% consolidated capacity growth for both Q1 and the full year, and the sequential PRASM improvement to (1) – 1 % in Q! is a happy sign. There’s a big geographic split in that PRASM figure though – Q1 will probably be flat or positive in the domestic and Latin markets, but down at least 2.5% in the Atlantic and the Pacific. That’s rough for a carrier with little Latin exposure and more Pacific and Atlantic flights than any other carrier save Delta (and without Delta’s counter-balancing access to the lucrative London Heathrow market). United is solidly positioned no doubt, but 2017 is going to present more of the same churn we’ve seen the last couple of years.

And of course there’s the huge CASM increase (+ 6.6% to 8.2%) YOY. That’s due primarily to the new labor agreements, and while unavoidable, alarm bells should be going off for anyone with a sense of history in the US airline industry.

You can read a full recap of the call below.