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United Airlines reported that its total capacity went up by approximately 23.4 percent during the first three months of the year.
United Airlines Holdings Inc (NASDAQ: UAL) announced its first-quarter (Q1 2023) financial results on April 18. According to the announcement, the company recorded a $256 million pre-tax loss for the first three months of the year. Nevertheless, the company reassured shareholders that it expects a strong international demand during the second quarter, estimated to be twice the domestic rate. As a result, UAL shares closed April 18 trading at $43.04, up 1.56 during the day. Additionally, the shares had gained about 1.30 percent during the after-hours to trade around $43.60, thus booking a total of 14.60 percent gains YTD. United Airlines has a reported market capitalization of approximately $13.86 billion.
United Airlines Q1 2023 Financial Results
According to the announcement, United Airlines reported a Q1 adjusted loss per share of 63 cents versus 73 cents expected by analysts. The total revenue for the first quarter came in at $11.43 billion, versus the $11.42 billion estimated by Wall Street analysts. Notably, the company’s operating revenue for the first three months of the year grew by about 51.1 percent compared to the first quarter of 2022. As for the total revenue per available seat mile (TRASM), the company noted that it grew by about 22.5 percent.
United Airlines reported that its total capacity went up by approximately 23.4 percent during the first three months of the year. The company purchased average fuel per gallon at $3.33 during the first quarter.
Commenting on the first quarter results, United Airlines CEO Scott Kirby approved the team’s performance.
“Our industry-leading operational performance contributed to an all-time high operating cash flow in the first quarter and keeps us on track to achieve our cost targets for the full year…We are watching the macroeconomic risks carefully, but demand remains strong, especially internationally, where we are growing at twice the domestic rate. We expect all of these factors will keep us on track to achieve our full-year adjusted diluted EPS1 target,” Kirby noted.
Quarterly Highlights
Subject to government approval, the company announced several new international routes including the largest South Pacific network expansion, to and from the continental US. The company plans to operate nearly 40 percent more flights from the United States to Australia and New Zealand. During the first quarter, the company launched the United Airlines Ventures Sustainable Flight Fund to support start-ups focused on decarbonizing air travel.
However, it is the $32 million Inflight Training Center in Houston to train a total of 15,000 people in 2023, including 4,000 flight attendants, that the company is most proud of.
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In addition to its shares falling, United Airlines also expects a “Q1 2023 average fuel price per gallon3 of between $3.31 and $3.41.”
United Airlines Holdings Inc (NASDAQ: UAL) stock recently dropped 6% following the company’s bleak Q1 2023 results forecast. On Monday, the Chicago-based major American airline said it expects an adjusted quarterly loss ranging between 60 cents and $1 per share. According to United Airlines, the low expectation is due to smaller demand growth compared to other months. In addition, the airline company ascribed its restrained Q1 2023 performance to increased operating costs, including higher fuel costs.
Probe into United Airlines Q1 2023 Forecast
The latest United Airlines Q1 2023 loss forecast is a step down from the company’s previous adjusted earnings projections. The American airliner had projected earnings of between 50 cents and $1 per share for the period ended March 31st.
In a securities filing following Monday’s market close, United Airlines said:
“While all months of 2023 are expected to produce unit revenue significantly above the corresponding months in 2019, the Company is observing new seasonal demand patterns, with lower-demand months such as January and February 2023 growing less than higher-demand months.”
Furthermore, the Chicago-based company also said that “oil prices and crack spreads have remained elevated as compared to the forward curve used for previous guidance of $3.19 per gallon for the first quarter 2023. As a result, the Company now expects a first quarter 2023 average fuel price per gallon of between $3.31 and $3.41.”
United Airlines said it trimmed its unit revenues estimate to between 22% and 23% over a year earlier. This development marks a 2%-3% drawdown from the company’s previous guidance of a 25% increase. Furthermore, the airline still expects earnings of between $10 and $12 a share in 2023 on an adjusted basis.
United Airlines second-quarter revenue could be higher than it previously anticipated. Based on travelers’ booking patterns, the airliner’s operating revenue could approach a 20% increase compared to last year. A slew of popular vacation periods and holiday breaks could see a spike in traveling activities.
On Tuesday, United Airlines looks to present at a JPMorgan (NYSE: JPM) industry conference alongside other airline companies. These include Delta Air Lines (NYSE: DAL), American Airlines Group (NASDAQ: AAL), and JetBlue (NASDAQ: JBLU).
JetBlue-Spirit Airlines Pending Acquisition
Last July, JetBlue agreed to acquire Spirit Airlines (NYSE: SAVE) to create the fifth-largest airline in the United States. At the time of the announcement, JetBlue planned to pay $33.50 a share in cash for the Spirit acquisition. This offer represented an increase from the $24.30 Spirit’s shares closed following the day’s trading session.
However, the deal, subject to regulatory approval, hit a stumbling block. The US Department of Justice sued to block the acquisition on competitive grounds. According to the DOJ, JetBlue acquiring Spirit could eliminate the largest ultra-low-cost option to major carriers in the US. As US Attorney General Merrick Garland said last week:
“If allowed to proceed, this merger will limit choices and drive up ticket prices for passengers across the country.”
However, JetBlue and Spirit disagreed with the DOJ’s assertion and vowed to contest the lawsuit. According to both airliners, the merger would enhance carrier competition and ultimately benefit air travelers.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.