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United Airlines sales hurt by Paris attacks, weaker oil industry demand

Tuesday, January 12, 2016 - 07:09
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United Airlines said on Monday that its passenger unit revenue may have fallen more than expected in the just ended fourth quarter, after the November attacks in Paris shook traveler demand and sharply lower oil prices hurt sales to the Houston hub carrier's energy clients.

[NEW YORK] United Airlines said on Monday that its passenger unit revenue may have fallen more than expected in the just ended fourth quarter, after the November attacks in Paris shook traveler demand and sharply lower oil prices hurt sales to the Houston hub carrier's energy clients.

Passenger unit revenue, which compares ticket sales to flight capacity, fell between 5.75 per cent and 6.25 per cent in the fourth quarter from a year ago, United Continental Holdings Inc said in a regulatory filing.

That compares to an earlier forecast for a drop between 4 per cent and 6 per cent for the October-December quarter.

The forecast may suggest continued turbulence for US airlines, which suffered from steep unit revenue declines in 2015.

An industry-wide fare hike last week by US$6 round-trip may nonetheless boost revenue in the current quarter.

For months, a strong dollar has hurt foreigners' demand for US travel and lowered the value of foreign sales in dollar terms.

A decline in fuel prices has also allowed large US carriers to chop fares in line with budget airlines, such as Spirit Airlines Inc, that have lower operating costs, ramping up domestic competition.

United, the second-largest US airline, has taken a bigger sales hit than peers from last quarter's nearly 20-per cent decline in US crude prices.

The carrier has accounted for more than 80 per cent of flights at George Bush Intercontinental Airport in Houston, according to aviation data and analytics company OAG.

The airline said its pre-tax profit margin for the fourth quarter will be between 9.75 per cent and 10.75 per cent, within the range of its prior guidance of a 9.5 per cent to 11.5 per cent margin.

REUTERS