United Reaps Benefit Of Cheaper Fuel

United Airlines reported a fourth-quarter profit of USD$823 million, up from USD$28 million a year ago.

Net profit for the full financial year was USD$7.34 billion, up from USD$1.132 billion the previous year.

For the first quarter 2016, United forecast a pre-tax profit margin between 8 and 10 percent, excluding special items.

It also said it expects passenger unit revenue, which compares ticket sales to flight capacity, will fall between 6 and 8 percent in the first quarter from a year ago.

The decline may suggest more turbulence for the airline after it saw steep unit revenue declines in 2015.

United said it will increase flight capacity by between 1.5 and 2.5 percent in the first quarter, below the 2 to 3 percent growth it earlier forecast.

The roll-back likely stems from modestly weaker demand amid slower US economic growth, Cowen and Co analyst Helane Becker said in a research note.

For months, a strong US currency has also lowered the value of US airlines' foreign sales in dollar terms.

The falling price of fuel has helped United's bottom line but hurt revenue from corporate energy clients near Houston's George Bush Intercontinental Airport, where United is the largest airline.

Lower fuel prices have led to more competition within the United States, enabling large US carriers to reduce fares in line with budget airlines that have lower operating costs.

However, major US airlines attempted two weeks ago to claw back revenue by increasing round-trip fares by USD$6 for domestic flights.

CEO TO RETURN

United said chief executive Oscar Munoz, who suffered a heart attack in October, will return from medical leave by the end of the first quarter or sooner.

Munoz said on a conference call he was feeling great after a heart transplant this month. United previously said he would return by the beginning of the second quarter.

Separately United said it will buy 40 Boeing 737-700s worth USD$3.2 billion at list prices, with delivery beginning in mid-2017.