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Airlines face a constant struggle to maintain profitability in the face of negligible customer loyalty. Because passengers are extremely price-conscious (particularly today), each individual airline is at the mercy of its competitors to keep fares at a level where it can earn a profit. Recently, the airline industry has been fairly successful at keeping fares high, allowing most carriers to be profitable this year, in spite of high fuel prices. For the first time in years, none of the carriers are aiming to cut prices and add capacity in order to grow passenger numbers. In large part this is because cost restructuring at the legacy carriers, particularly United (NYSE:UAL), Delta (NYSE:DAL), and U.S. Airways (LCC), has narrowed the cost gap with competitors like Southwest (NYSE:LUV) and JetBlue (NASDAQ:JBLU).

While airlines are largely at the mercy of their competitors when it comes to pricing, there is one area where they have control over their businesses: capacity. By reducing the number of seats available, airlines can more closely match demand and keep prices high. Given the high cost of fuel, this is particularly important. Airlines want to fill as many seats as possible, since the additional fuel burn from an extra passenger is negligible compared to the total amount of fuel used. The key number here is passenger load factor: the number of miles flown by paying passengers (revenue passenger miles or RPMs) divided by the total available seat-miles (ASMs).

United Continental is shaping up to have a very strong November by this metric. In October, the company posted a roughly 10% increase in PRASM (the key revenue figure) from October 2010, despite having a load factor of 82.0%, down by 1.5% from the previous year. This means that the average fare increase was even more than 10% year over year.

By contrast, United has posted a load factor of 81.9% through Sunday, 11/20. This number is updated daily and posted on the company's investor relations homepage. (To my knowledge, United is the only carrier that provides this information on more than a monthly basis.) With the coming week being one of the busiest for air travel, that number is likely to rise between now and the end of the month. By contrast, the company posted an 80.9% load factor in November, 2010.

With passenger load factor showing a substantial increase year over year (compared to the decrease in October), I expect United to post even better PRASM performance this month. If the company can put together a PRASM gain of 12-15%, I expect analysts to raise their earnings estimates and sentiment on the stock to reverse. Falling jet fuel prices will provide support as well. With UAL currently trading near its 52-week low, it's a great time to pick up shares on the cheap. (See my full case for UAL here »)

The other airlines are likely to do well this Thanksgiving, too. But since they are not as transparent as United, we'll have to wait until next month to see.

Disclosure: I am long UAL, LCC.

Source: This Number Makes United Continental A Strong Buy