CHICAGO (AP) - United Airlines saved $1 billion on fuel in the first half of this summer, pushing the company to a record $1.2 billion profit despite a decline in revenue.
CHICAGO (AP) — United Airlines saved $1 billion on fuel in the first half of this summer, pushing the company to a record $1.2 billion profit despite a decline in revenue.
The results indicated that United's average fares fell as the nation's second-biggest airline added flights and seats both in the U.S. and on international routes.
United also said Thursday that it would spend up to $3 billion to buy back stock, which typically increases the value of outstanding shares.
Net income in the second quarter jumped 51 percent. Excluding one-time items, adjusted profit was $3.31 per share. Wall Street expected per-share earnings of $3.29, according to a poll by Zacks Investment Research.
However, revenue fell 4 percent to $9.91 billion, missing the analyst target of $10.02 billion.
The airline took in 7 percent more from passenger fees , but a key figure, revenue for every seat flown one mile, dropped 5.6 percent. That usually indicates lower average fares.
U.S. airlines tightly controlled the supply of flights and seats for several years, and last month the Justice Department began investigating whether the airlines were violating antitrust laws by working together to hold down the supply of tickets.
But the airlines have added more capacity this year, which seems to be showing up in slightly lower prices.
United, for example, boosted U.S. capacity 3.7 percent over the second quarter of 2014, contributing to a 3.4 percent decline in the revenue-per-seat-mile figure on domestic flights. United grew international capacity 3.1 percent and revenue per seat mile on those routes plunged 8.1 percent.
Chicago-based United spent $2.11 billion on fuel in the second quarter, down 32 percent from $3.10 billion in the same quarter last year, which was before oil prices began to plummet. Cheaper fuel meant that United spent more on labor than fuel.
United Continental Holdings Inc. was formed through the 2010 merger between United and Continental, which has had its share of bumps. United has been struck by several technology glitches since combining the reservations and other systems of the two airlines, including an outage this month that briefly grounded the airline's entire fleet and led to more than 1,000 flight delays.
CEO Jeff Smisek said the second-quarter results reflected progress on the company's long-term plan. He said the share-buyback program illustrated management's confidence.
In midday trading, shares rose 71 cents to $57.78. Through Wednesday, they were down 15 percent in 2015 after gaining 77 percent last year.
Parts of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UAL at http://www.zacks.com/ap/UAL