Source: CNN Money

UAL Predicts Higher 1st-Qtr Unit Revenue, Along With Surge in Fuel Costs and Lower Traffic

NEW YORK (Associated Press) - United Airlines parent UAL Corp. forecast higher first-quarter unit revenue on Thursday, but also said it expects fuel costs to surge and non-fuel expenses to creep up as well.

UAL also said it expects mainline traffic to decline 2.5 percent to 3 percent this quarter on flat capacity. Mainline operations exclude regional affiliates.

UAL forecast an increase of between 9 percent and 10 percent in mainline unit revenue during the first quarter. Unit revenue is measured by revenue per available seat mile, or RASM, which factors in dollars received for each seat flown one mile.

It also predicted "solid" unit revenue in its North American and international markets for the second quarter.

However, the Chicago-based airline company said mainline jet fuel costs will be about $2.74 per gallon, including taxes and hedging benefits. That adds up to about $1.53 billion in fuel costs, based on its prediction of consuming 559 million gallons.

In the year-ago quarter, UAL spent a total of $1.04 billion on fuel, at $1.89 per gallon.

UAL predicted that mainline unit operating costs will also rise 3 percent to 3.5 percent, excluding fuel and special items.

The company reported the expectations in a Securities and Exchange Commission filing on Thursday.