United Profit Misses Estimates After Ending Fuel Accord

United Continental Holdings Inc.’s fourth-quarter profit missed analysts’ estimates, after the company ended an agreement to sell fuel to a third party.

Profit excluding some items rose 86 percent to $461 million, or $1.20 a share, the Chicago-based airline said in a statement today. That fell short of the $1.22 average estimate of 17 analysts compiled by Bloomberg. Revenue decreased 0.2 percent $9.3 billion, matching analysts’ estimates.

Delta Air Lines Inc. earlier this week reported results that beat analysts’ estimates and issued a first-quarter forecast suggesting airfares will stay intact even as jet fuel prices decline. Analysts forecast the six largest U.S. carriers to post an industry-record $2.7 billion in fourth-quarter profits, excluding special items.

United said it’s expecting unit revenue of down 1 percent to up 1 percent for the first quarter, and said pretax margins would be 5 percent to 7 percent.

The shares rose less than 1 percent in pre-market trading, to $69.70.

Some analysts recently lowered their estimates on United based on expectations for higher costs in the fourth quarter. Evercore ISI analyst Duane Pfennigwerth on Jan. 11 cited fuel when he lowered his earnings estimate by 30 cents per share.

While cheap fuel should be a help, United and some other airlines are having to write down the value of their fuel hedging contracts, which is eating into earnings. Pfennigwerth said United pushed $85 million of 2015 fuel contract losses into the fourth quarter.

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