United Continental Holdings Inc(NYSE:UAL) and Southwest (NYSE:LUV) Beat Estimates as Fuel Expenses St

Northern, WI 1/25/2013 (avauncer) - United Continental Holdings Inc. (NYSE:UAL) and Southwest Airlines Co. (LUV) have beat analysts’ profit estimates in the 4^th quarter in light of steadying fuel costs, their most worrying expense. United (NYSE:UAL) lost of 58 cents per share, except few items, was lower than the 61 cent general estimate. Southwest’s (NYSE:LUV) adjusted gain of 9 cents per share was better than an 8 cent projection.

Fuel costs were a solace for the airlines, which have had to combat rising prices and increasing labor costs at the same time with slow economic growth restricting their earnings. Southwest’s (NYSE:LUV) increase in cost of fuel went down to 0.7% from 59% in the previous year. United’s (NYSE:UAL) fuel costs declined to 0.3% as against 26% increase in the previous year.

Ray Neidl, an airline analyst, says, “The beats are fitting an industry pattern indicating it’s going to be a very strong year for the airlines. Unless something bad happens with the economy or oil prices shoot up, I think these trends are going to continue for the year.” United’s (NYSE:UAL) stock went up 2.2% to close at $25.54 on NYSE. On the other hand, Southwest’s (NYSE:LUV) stock went up by 0.8% to close at $11.45.

United (NYSE:UAL) became 4^th biggest carrier in the world following its merger with Continental Airlines. It increased sales of frequent-flier miles, change fees and costs for checked bags so as to reduce the effect of poor ticket sales. Total income for the company declined 2.5%to $8.7 billion for the quarter, higher than the analysts’ estimates of $8.67 billion

United’s (NYSE:UAL) local on-time arrival ratio was 80.1% for the 4th quarter, beating its aim and bettering on 72.4% for the 3^rd quarter and 76.4% for the 2^nd quarter, when it experienced frequent late flights and inadequate extra planes to make up for those experiencing technical problems. CEO Jeff Smisek said, “With much of our integration behind us, our significantly improved operational performance and our increasing customer satisfaction, we can now go forward as one company”.

As with United Continental Holdings Inc(NYSE:UAL), Southwest (NYSE:LUV) is depending on fees to increase sales. The airline anticipates boosting yearly revenue by around $100 million in a departure from its position of waiving of some fees, considered standard in the industry. The company’s sales in the 4^th quarter increased 1.6% to $4.17 billion. Profit except for few items decreased 1.5% to $65 million from $66 million, or 9 cents per share, from the previous year. CEO Gary Kelly said, “These solid earnings were achieved despite significant efforts and costs related to critical strategic initiatives.”

The share price of United (NYSE:UAL) went up by 2.16% to close at $25.54, while the share price of Southwest (NYSE:LUV) increased by 0.79% to close at $11.43 per share.