United Continental Holdings, the United Airlines parent, posted its earnings late Tuesday afternoon that beat estimates on Wall Street.
However, immediately after, shares plunged during trading after-hours at the time of an investor presentation that has been long awaited in which United unveiled its strategy to add additional seats while maintaining a tight lid on its costs.
Some Wall Street analysts appear to be unconvinced the United strategy would help it grow margins.
The presentation gave CEO Oscar Munoz along with other top brass at United an opportunity to impress its investors, who dumped shares following a tense earnings call with executives last quarter that gave a not so clear picture of costs and other important metrics for 2018.
Results were better than expected for the 2017 fourth quarter with adjusted earnings per share of $1.40, while Wall Street was expecting $1.34.
However, United struggled trying to increase revenue brought in for each seat it flies a mile, an important metric in the industry. However, during the just completed fourth quarter it increased 0.2% from the same period one year ago, slightly more than a previous forecast that was flat.
United announced that its revenue for the fourth quarter reached $9.44 billion, which was an increase of 4.3% compared to the same period one year ago and higher than the $9.42 billion forecasted by Wall Street.
The airline posted $580 million in net income for the quarter which was 46% higher than the same period one year ago.
Like competitors, the airline is up against higher bills for jet fuel, as oil prices climb. During the fourth quarter, fuel costs for the airline increased by 18% from the same period a year ago to slightly higher than $1.89 per gallon.
However, during the presentation to investors, shares dropped by over 6% in trading after hours as the airline forecasted capacity growth of between 4% and 6%. Strong growth of seat counts added to modest increases in its revenue could challenge United as it faces higher costs like fuel.
The airline released per share earnings forecast of $6.50 to $8.50 for this year.
United unveiled initiatives to increase its revenue, including the expansion of its basic, no-frills economy class and will allow those customers to pay to select seats.
To lower costs, United started to print its magazine, found on its planes, with different paper making it lighter, allowing United to save over 170,000 gallons of jet fuel per year.