United Airlines Q1 Profit, Unit Revenue Drops

United Airlines reported a lower first-quarter profit and said it would slow its growth plans as flight capacity across the industry has exceeded passenger demand, pushing prices down.

United earned USD$313 million in the first quarter, down 38 percent from the previous year's USD$508 million.

Total operating revenue for the quarter was USD$8.195 billion, a 5 percent drop from the Q1 2015.

Despite the results, shares slumped nearly 3 percent in after-hours trade because the airline forecast that unit revenue would continue to sink from a year ago.

United executives presented a bleaker picture of demand than rival Delta did last week, which had said average US domestic fares were starting to rise.

"Demand is not growing at the level of industry capacity," United's Chief Revenue Officer Jim Compton said.

A drop in oil prices continues to hurt bookings for travel from Houston, one of United's principal hubs. At the same time, a surge in flights from low-cost airlines such as Southwest Airlines and Spirit Airlines continues to keep prices low compared to a year ago.

United said it expects passenger revenue as measured against flight capacity to decline by between 6.5 and 8.5 percent in the second quarter. That measure fell 7.4 percent in the first quarter.

In response to soft demand, United said it has reduced plans to add flight capacity in 2016 by 0.5 percentage points, meaning it will grow between 1 and 2 percent compared to a year ago.

Cheap fuel has at least lowered United's costs. The airline said its pretax profit margin was 8.4 percent in the first quarter, compared with 6.8 percent a year ago.