Shares of United Continental Holdings declined by almost six percent on Wednesday, despite telling investors that earnings had improved versus the prior year by 5.4%. The disappointment stemmed from United’s weak guidance for unit passenger revenue for the remainder of the year, a sign that the largely fixed cost industry may have too much capacity.
Second quarter unit passenger revenue improved by about 2% versus last year, but the company said it expects its third quarter result to be between -1% and +1%.
In contrast to United, when competitor Delta Air Lines reported its earnings, it told investors that it expected third quarter unit revenue growth would trend anywhere from a 2.5% to a 4.5% increase.
United has had to deal with the continuing fall out from its social media disaster when a bumped passenger was filmed being beaten after he refused to relinquish his seat. The company eventually settled with the passenger for an undisclosed amount and promised policy changes.
Overall second quarter revenue improved by 6.4% to $10 billion.
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