United’s Traffic Growth Is Slightly behind Its Capacity Growth



Traffic growth

In August 2017, United Continental’s (UAL) traffic grew 1.2% YoY (year-over-year), slightly lower than its capacity growth in the same period. YTD (year-to-date), United’s traffic had grown 3.3% YoY, again slightly lower than its capacity growth.

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Domestic market

As can be expected, United Continental’s traffic growth was driven mainly by domestic market traffic growth thanks to capacity growth in the region. In August 2017, United’s domestic traffic grew 4.0% YoY. YTD, the domestic region had witnessed 5.1% YoY traffic growth. Legacy players Delta Air Lines (DAL), American Airlines (AAL), and Alaska Air Group (ALK) have also seen good growth on domestic routes.

International traffic rising slowly

United’s international traffic grew by just 0.2% YoY in August 2017, contributed to by Atlantic growth. Latin America’s traffic fell 2.8% YoY, and Pacific traffic fell 1.1% YoY, despite growth in capacity. Atlantic market traffic, on the other hand, grew 2.5% YoY in August 2017, despite lower capacity.

YTD, in August 2017, international market traffic had grown 1.0% YoY, contributed to by Latin America and the Pacific region. Latin American traffic grew 2.4% YoY and Pacific traffic grew 1.3% YoY. In contrast, Atlantic traffic fell 1.0% YoY.


In fiscal 2017, we can expect United’s traffic growth to fall behind its capacity, which United is expanding aggressively. This situation will most likely impact utilization and yields, which we’ll discuss in our next article. Investors can gain exposure to United Continental with the iShares Edge MSCI Multifactor Industrials ETF (INDF), which has a 1.7% exposure to United.


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