United Continental Holdings, Inc. (United) on Thursday reported a total first quarter loss of 448 million U.S. dollars, as integration costs and a sharp increase in fuel expenses brought down profits at the world's largest airline carrier.
The Chicago-based company said that it lost 286 million dollars in the first quarter of 2012, as well as suffering another 162 million dollar charge due to integration costs.
Despite the steep net income loss, in revenue United actually posted year-over-year gains. First-quarter consolidated passenger revenue was up 5.5 percent versus last year, and first-quarter consolidated passenger revenue per available seat mile increased 5. 2 percent from the same period in 2011.
Fuel costs, however, had skyrocketed for United since last year. 2012 first quarter consolidated fuel expense increased by more than 20.8 percent compared to the first quarter of 2011, or by 557 million dollars.
Together, the integration costs and higher fuel expenses led to United's 448 million dollar total first quarter loss, or 1.36 dollar loss per share.
"This was a difficult quarter, but we made significant progress with our integration and we're now able to serve our customers as a single airline," United President and Chief Executive Officer Jeff Smisek said.
"We are now on the steep back slope of our integration and can look forward to delivering more benefits from the merger in the remainder of the year," Smisek said, expressing a belief that the situation was set to improve in the future now that most of the integration has been solidified.
Airlines United and Continental first announced their merger in 2010, which made the new company the largest airline carrier in the world. Since the consolidation, United Continental has had to undergo the necessary costs to streamline and reorganize itself for the new operation, including combining both airlines' separate booking systems into a single database.
According to United's Chief Revenue Officer Jim Compton, this system integration also limited revenue, as booking levels were reduced at the time in order to handle the change.
United carried more traffic than any other airline in the world in 2011 and employs more than 85,000 people worldwide.