By Jeffrey Dastin
(Reuters) - United Continental Holdings Inc on Thursday said its ailing CEO will return from medical leave by the end of the first quarter or sooner, as it reported fourth-quarter profit below analysts' expectations.
Shares were up 1.1 percent after rising more than 3 percent earlier, part of a broader rebound in airline shares.
Chief Executive Oscar Munoz, who suffered a heart attack in October, said on a conference call he was feeling great after a heart transplant this month. United previously said he would return by the beginning of the second quarter.
The news overshadowed United's warning that it expects unit revenue to keep sinking as sharply lower oil prices hurt sales to energy clients around the airline's Houston hub.
United, the second-largest U.S. airline by capacity behind American Airlines Group Inc, doubled its adjusted profit to $934 million, or $2.54 per diluted share. Analysts on average expected United to earn about $959 million, or $2.58 per diluted share, according to Thomson Reuters I/B/E/S.
United forecast a pre-tax profit margin between 8 percent and 10 percent in the first quarter, excluding special items.
It also said it expects passenger unit revenue, which compares ticket sales to flight capacity, will fall between 6 percent and 8 percent in the first quarter from a year ago.
The decline may suggest more turbulence for the airline after it saw steep unit revenue declines in 2015. Sterne Agee CRT analyst Adam Hackel said the unit revenue forecast was worse than expected.
United said it will increase flight capacity between 1.5 percent and 2.5 percent in the first quarter, below the 2 percent to 3 percent growth it earlier forecast.
The roll-back likely stems from modestly weaker demand amid slower U.S. economic growth, Cowen and Co analyst Helane Becker said in a research note.
For months, a strong U.S. currency has also lowered the value of U.S. airlines' foreign sales in dollar terms.
The plummeting price of fuel has helped United's bottom line but hurt revenue from corporate energy clients near Houston's George Bush Intercontinental Airport, where United is the largest airline.
Lower fuel prices have led to more competition within the United States, enabling large U.S. carriers to chop fares in line with budget airlines that have lower operating costs, such as Spirit Airlines Inc.
However, major U.S. airlines attempted two weeks ago to claw back revenue by hiking round-trip fares by $6 for domestic flights.
Separately United said it will buy 40 small planes from Boeing (N:BA) Co, worth $3.2 billion at list prices, in a blow to Bombardier Inc.