United Airlines' fourth-quarter passenger revenue grew 3.9 percent year over year to $9.9 billion, closing out a challenging year on a strong note and kicking 2020 off to a "nice start," according to executives.
Fourth-quarter domestic passenger revenue increased 3.2 percent year over year to $6.3 billion, despite continued pressure faced by the Boeing 737 Max grounding, EVP and chief commercial officer Andrew Nocella said. As Boeing this week told airlines that it now expects that the Max will not get regulatory approval to return to the skies until the middle of this year, United executives in their earnings call said they doubt they will be able to fly the aircraft type this summer.
Domestic capacity was up 2.6 percent year over year in the quarter, as United added a total of 69 new routes over the course of 2019.
Passenger revenue on international routes was up 5.2 percent year over year to $3.6 billion. The growth rate was highest on Latin America routes, up 11 percent year over year. Transatlantic passenger revenue was up 7.4 percent year over year in the quarter despite lower demand for German point-of-sale corporate travel spurred by weakness in manufacturing sectors, Nocella said. U.S. point-of-sale strength made up for that, he said.
Fourth-quarter passenger revenue on transpacific routes declined 1.8 percent year over year, stemming from weakness on routes to Hong Kong, Beijing and Shanghai, Nocella said. Overall 2019 corporate demand was healthy but down year over year for transpacific routes, he said.
Some of those weaker spots are showing promise this year, however. "Demand trends from Germany have stabilized in recent weeks," and the carrier does not expect further unit revenue decline from Hong Kong routes despite it being "difficult to read," Nocella said. While United does not yet have a definitive read from its corporate customers regarding the effects of the recent U.S.-China trade agreement, demand on Beijing and Shanghai routes has been improving in recent weeks as well, though executives are carefully monitoring the effects of the coronavirus outbreak.
United reported net income of $641 million for the quarter, up from $461 million in the fourth quarter of 2018. For the full year, the carrier's net income was $3 billion, up 41.8 percent year over year. In terms of earnings per share, that is $11.58, which hit the target of between $11 and $13 that executives had set a year ahead of schedule.
"This is the new United we set out to build more than four years ago," said United CEO Oscar Munoz, who is stepping down from the position in May. "As we embark on a new year and decade, I believe the outlook for United's future has never been brighter."
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