Last updated: 12:20 PM ET, Thu April 23 2015

United Continues Major Financial Turnaround

Airlines & Airports | United Airlines | Rich Thomaselli | April 23, 2015

United Continues Major Financial Turnaround

If any airline is symbolic of the financial rise of the industry, it’s United.

The Chicago-based carrier announced first-quarter earnings this morning and reported a record Q1 profit of $508 million. UAL earned a 17.1 percent return on invested capital for the 12 months ended March 31, 2015.

That’s a $1 billion turnaround from a year ago when United lost $600 million in the first quarter of 2015.

"This quarter we reported a profit of nearly $600 million, excluding special items, a $1 billion improvement compared to the first quarter of 2014, and I'd like to thank the United team for all their great work," said Jeff Smisek, UAL's chairman, president and chief executive officer, in a statement. "We continued to improve our operational reliability and deliver products that enhance our customers' experience, including new aircraft, improved food, new inflight entertainment options and modern facilities. We are making significant progress on our long-term plan to reduce costs, improve our margins and grow our earnings, and expect our second quarter pre-tax margin to be between 12 and 14 percent, excluding special items."

In the quarter, UAL returned approximately $200 million to shareholders as part of its previously announced $1 billion share buyback program. The carrier also prepaid approximately $120 million of debt and announced its intention, in the second quarter, to prepay $601 million of its 6 percent notes due in 2026 and 2028.

Southwest Airlines reported net income of $453 million, a huge jump as well from its $152 million profit for the first quarter of 2014.

"Customer demand was strong throughout first quarter 2015, resulting in a record first quarter load factor of 80.1 percent,” Southwest CEO Gary Kelly said in a statement. “As expected, first quarter 2015 passenger revenues grew in line with our available seat mile (ASM) growth of 6.0 percent, year-over-year."

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