DALLAS (AP) — Lower fuel prices helped United Airlines earn a record first-quarter profit despite a dip in revenue.
The airline predicted that a key revenue figure will fall in the second quarter, but CEO Jeff Smisek predicted another record profit in the April-through-June period on lower costs and higher margins.
United also said it will speed up changes to its fleet, including retiring more small planes.
United Continental Holdings Inc. said Thursday that first-quarter net income was a record $508 million, compared with a year-ago loss of $609 million.
Excluding items, United said it earned $1.52 per share. Analysts expected $1.44 per share, according to FactSet.
Revenue fell 1 percent to $8.61 billion, close to analysts' forecast of $8.60 billion.
The key, however, was a 36 percent decline in spending on fuel, saving United more than $1 billion compared with the same quarter last year.
Fuel was United's biggest expense a year ago, but it has fallen below labor costs. United and other airlines have held on to most of the savings from cheaper fuel —travel demand has been strong enough that they haven't needed to cut fares.
United, the nation's second-biggest airline company behind American when judged by passenger traffic, said that a key revenue figure — revenue for every seat flown one mile — will fall by 4 to 6 percent in the second quarter. It blamed the strong U.S. dollar, which has hurt the value of tickets sold in other currencies, plus lower fuel surcharges and less travel by people in the energy industry.
The Chicago-based airline also announced a slew of changes to its fleet.
The company is speeding up the retirement of United Express 50-seat planes — many passengers don't like them anyway — retiring more than 130 of them by the end of the year and more after that as their leases expire.
United said it will lease bigger used planes and extend the lives of others. And it will replace orders for 10 Boeing 787 jets with bigger Boeing 777s beginning in 2016. United was the first U.S. airline to get the 787, nicknamed the Dreamliner, a plane containing more lightweight carbon material for better fuel mileage.
Executives said on a conference call that they still like the Dreamliner, but the size of the 777 makes it a better fit on some routes such as to and from Newark, New Jersey.
After the results, J.P. Morgan analyst Jamie Baker said United's second-quarter outlook seemed below expectations. But S&P Capital IQ analyst Jim Corridore raised his estimates for United's earnings this year and next, saying he expected the company to generate cash, reduce debt and buy back shares.
United Continental shares fell $1.22, or 1.9 percent, to close Thursday at $62.80. They are down 6 percent this year.
David Koenig can be reached at http://twitter.com/airlinewriter