United Airlines reported an 80% decline in net income Monday for the third quarter, after paying $545 million in taxes.
The Chicago-based airline reported $965 million in net income for July, August and September, down from $4.8 billion for the same period a year earlier.
Earnings of $3.01 per diluted share just missed estimates of $3.03 per share by S&P Global Market Intelligence.
Andrew Levy, United’s chief financial officer, told reporters a one-time non-cash gain that the company reported led to a larger tax bill, so that not including those special items would be a better way to gauge the company’s economic results.
“Adjusting for taxes, net income was down 9% but earnings per share increased 7% due to a 15% reduction in share count as compared to last year,” Levy said.
The results came on $9.9 billion in revenue, a 3.8% decline from $10.3 billion in the same period a year earlier. But the company also trimmed expenses 1.4% to $8.3 billion. Lower fuel costs continue to help the industry, with a 17.1% drop in fuel costs for United to $1.6 billion for the quarter.
“We delivered another very good quarter, demonstrating the progress United continues to make at improving our customer service, which included our best third quarter on-time performance in company history,” CEO Oscar Munoz said in a statement.
Jim Corridore, an airline analyst at CFRA Research, kept a “strong buy” recommendation for United because he expects reductions in industry capacity to help airline pricing.
“We think improved pricing will drive increased valuations across the sector,” he said.
The earnings report came days after United struggled with a computer glitch. An outage that began Thursday night that was resolved Friday by 4 a.m. prompted delays as long as six hours for some flights.
Linda Jojo, United’s chief information officer, said the outage stemmed from a routine flight schedule update.
“We had an internal systems glitch that was basically two of our systems raced each other to get data to a third system,” she said. “That caused two programs to basically overload each other.”
But staffers got the problem corrected with only 16 flights cancelled. Jojo said a patch will prevent the problem from recurring.
“We have already figured that out so it won’t happen again,” Jojo said. “We really did a fantastic job of recovering from the issue.”
Other airlines have had similar problems with computer breakdowns. Delta Air Lineslost $150 million from canceling 2,300 flights during an outage in August. Southwest Airlines canceled more than 2,000 flights in July after an outage blamed on a failed router. United and American airlines each suffered computer problems in summer last year.