It's Official: The United-Continental Merger Is Working

Airlines have had a big week, few more so than United Continental Holdings (NYSE: UAL  ) . In the first earnings report since the closing of their multibillion-dollar merger, the combined operations of these carriers showed improvement in every area that matters.

Investors took notice. After soaring in anticipation the day before, shares of UAL climbed 0.6% yesterday after reporting revenue and earnings that didn't quite meet the Street's expectations:

Metric

Estimate

Actual

Year-Ago

Revenue

$5,910 million

$5,394 million

$4,433 million

Per-share earnings

$2.16

$2.12

($0.41)

Gross margin

Not available

42.9%

17.1%

Free cash flow

Not available

$357 million

($4 million)

Sources: Yahoo! Finance and Capital IQ, a division of Standard & Poor's.

Fools can be forgiven for thinking these results are disappointing. Comparatively, they are. American Airlines parent AMR Corp. (NYSE: AMR  ) blew away estimates when it reported its first quarterly profit in two years. Delta (NYSE: DAL  ) , meanwhile, reported higher loads, filling its aircraft to 85.9% of capacity during the just-completed quarter.

But give UAL credit. Cash flow is the lifeblood of any capital-intensive business, and United Continental is finally producing some. Return on capital also rose to 23%. I'll grant that history says investors should avoid airlines, but if United Continental keeps putting up numbers like these, the stock will eventually follow.

Now it's your turn to weigh in. Do you like United Continental at these levels? Share your thoughts in the comments box below. You can also click here to rate the stock in our free Motley Fool CAPS investor intelligence database.

Further Foolishness featuring United Continental:

Interested in more info on United Continental Holdings? Add it to your watchlist by clicking here.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool is also on Twitter as @TheMotleyFool. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy has been on the job for 17 years. Can you believe it?


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1342039, ~/Articles/ArticleHandler.aspx, 10/23/2014 1:23:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement