MIAMI — The parent company of United Airlines reported a profit of $28 million in the fourth quarter off of earnings of $461 million. Profits were down from $140 million earned in the same quarter in 2013, and the carrier missed the average analyst estimate of $1.22 per share.
Like Delta, United had to deal with $433 million in special costs attributed to settle losing fuel hedges and a voluntary buyout for flight attendants. For the year, the Chicago-based carrier reported a profit of $1.13 billion, including special items.
Overall, the airline reported it earned a 12.9 percent return on invested capital in 2014. In 2014, United returned approximately $320 million to shareholders as part of its previously announced $1 billion share buyback program. It also spent $310 million to retire convertible debt that was convertible into approximately 5.8 million shares of UAL common stock. And it ended the year with $5.7 billion in unrestricted liquidity.
In the fourth quarter, United saw total revenue drop 0.2 percent year-over-year to $9.3 billion. Consolidated passenger revenue in the quarter rose 1.3 percent to $8.1 billion year-over-year.
While ancillary revenue per passenger in the fourth quarter — covering items such as baggage fees, seating upgrades and premium boarding — was 9.7 percent year-over-year to more than $22 per passenger, other revenue dropped 14.3 percent year-over-year to $970 million, mostly due to the company choosing to discontinue an agreement to sell fuel to a third party.
Consolidated revenue passenger miles increased 0.1 percent and consolidated available seat miles increased 0.9 percent year-over-year for the fourth quarter, resulting in a fourth-quarter consolidated load factor of 81.7 percent.
UAL ended the fourth quarter with $5.7 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. As part of its $1 billion share buyback program, the company spent approximately $100 million in share repurchases in the fourth quarter. For the year, United returned a total of approximately $320 million to shareholders through share repurchases and open market transactions. In addition, for the year the company spent $310 million to retire convertible debt that was convertible into approximately 5.8 million shares.
“We’re starting 2015 as a better airline, and we expect to generate far better results. I’m excited about what we will do this year to improve our operations, our product, and our customer service, focusing on growing our core earnings and margins. For the first quarter, we expect our pre-tax margin to be between 5 and 7 percent, excluding special items,” said Jeff Smisek, UAL’s chairman, president and CEO in a statement.