(Reuters) - 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 percent and 6.25 percent in the fourth quarter from a year ago, United Continental Holdings Inc (UAL.N) said in a regulatory filing.
That compares to an earlier forecast for a drop between 4 percent and 6 percent for the October-December quarter.
The forecast may suggest continued turbulence for U.S. airlines, which suffered from steep unit revenue declines in 2015. An industry-wide fare hike last week by $6 round-trip may nonetheless boost revenue in the current quarter. For months, a strong dollar has hurt foreigners’ demand for U.S. travel and lowered the value of foreign sales in dollar terms.
A decline in fuel prices has also allowed large U.S. carriers to chop fares in line with budget airlines, such as Spirit Airlines Inc SAVE.O, that have lower operating costs, ramping up domestic competition.
United, the second-largest U.S. airline, has taken a bigger sales hit than peers from last quarter’s nearly 20-percent decline in U.S. crude prices.
The carrier has accounted for more than 80 percent 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 percent and 10.75 percent, within the range of its prior guidance of a 9.5 percent to 11.5 percent margin.
Reporting by Jeffrey Dastin in New York, editing by G Crosse