Boston, MA 07/09/2014 (wallstreetpr) – United Continental Holdings Inc (NYSE:UAL) intends to outsource about 600 positions in its systems at 12 airports across the U.S. The move will help the company to cut costs while improving earnings, which have plummeted in recent times when as rivals witness growth.
The company employs about 87,000 workers.
Although the company announced plans outsource more jobs, it also intends retake some previously outsourced positions. As such, the company will reclaim about 400 jobs at Denver, Honolulu, Dulles and Phoenix, according to a contract with workers union.
The affected positions include baggage handlers, gate and ticket agents. The impacted airports are mostly served by United Express flights.
Improving performance
The company suffered a loss of about $609 million in 1Q2014 at a time when its rivals American Airlines Group Inc (NASDAQ:AAL) and Delta Air Lines, Inc. (NYSE:DAL) made money in the quarter. Therefore, the move to remove more jobs from its system is expected to support earnings improvement.
In the most recent quarter United Continental Holdings Inc (NYSE:UAL) lost $1.33 per share on revenue of $8.70 billion. While the EPS beat Wall Street estimate, revenue fell short of the estimated $8.71 billion for the quarter.
Although the company’s spokeswoman Christen David termed the move as a difficult one, she said it was needed to ensure “our costs are competitive.”
Wall Street sentiments
Analysts are not really excited about United Continental Holdings Inc (NYSE:UAL), but they also don’t think it is a bad stock to own.
For example, JPMorgan Chase & Co. (NYSE:JPM) rates the stock as Neutral, and they have a price target of $43.50 on it. That is the same position that analysts at Zacks view the stock, although they previous had it at Outperform. Cowen and Company is more bullish on the stock, rating it an Outperform with a price target of $50. As such, the stock of United Continental Holdings Inc (NYSE:UAL) carries a consensus rating of a Hold and average price target of $48.27 apiece.
