United Sees Revenue Cut as Storms Erase 22,500 Flights

United Continental Holdings Inc. fell after reporting that a benchmark revenue gauge will decline this quarter because winter storms forced the cancellation of more than 22,500 flights at the world’s second-largest airline.

Revenue for each seat flown a mile will drop by 0.5 percent to 2.5 percent from a year earlier across all of the carrier’s operations, United said yesterday in a U.S. regulatory filing. In January, United projected that consolidated first-quarter unit revenue would be unchanged or rise by as much as 2 percent.

The filing offered a glimpse at the financial fallout for the U.S. industry from a winter travel season plagued by delays and cancellations outstripping those of recent years. Kevin Crissey, an analyst at Skyline Research LLC, called United’s results an “ugly outcome” and widened his estimate for a quarterly loss to $1.46 a share from 62 cents.

“That is a huge hole from which the company needs to climb to have a good annual result,” Crissey, based in Mahwah, New Jersey, wrote in a note to investors.

United fell 3.3 percent to $44.96 in New York, leading declines by six carriers in the nine-member Bloomberg U.S. Airlines Index.

Weather Struggle

Airlines have been struggling with winter storms that pummeled hubs in Chicago, Atlanta and the New York area in recent months, wiping out thousands of flights and disrupting travel for millions of people. Snow across the East Coast on Feb. 13 erased almost 7,600 flights, more than on the worst day of Hurricane Sandy in 2012, data provider MasFlight reported.

The three biggest U.S. carriers -- American Airlines Group Inc., United and Delta Air Lines Inc. -- have multiple bases in the regions belted by snow. Southwest Airlines Co., the largest discounter, and JetBlue Airways Corp. also were affected.

United’s “weather impact will exceed that of American and Delta, driven by the fact that Chicago’s storm activity resulted in several consecutive days of cancellations,” Jamie Baker, a JPMorgan Chase & Co. analyst in New York, said in a note.

A pile-up of scrubbed flights can spur business fliers to simply abandon a trip, while vacation travelers probably stuck to their plans during one-day disruptions elsewhere, wrote Baker, who like Skyline’s Crissey has a neutral rating on United.

Regionals Hit

About 20,000 of United’s grounded flights were at its regional partners, producing a “disproportionate” effect on unit revenue, the airline said. Because regional flights are shorter, revenue from each seat flown a mile is almost twice as much as that on United’s main jet fleet.

The January and February storms reduced the amount of completed regional flights to 87.1 percent, “an extraordinarily low level,” and almost nine percentage points below its mainline operations, United said.

Yields, or the average fare per mile, also are weaker than forecast this quarter because a shift in demand for Easter and spring-break travel into April from March was larger than projected, United said.

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