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United Airlines (UAL) Posts Q2 Loss, Sees a Dip in Load Factor
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With coronavirus continuing to wreak havoc on the airline space, United Airlines (UAL - Free Report) became the second carrier after Delta Air Lines (DAL - Free Report) to report a loss for the second quarter of 2020.
United Airlines incurred a loss (excluding $3.52 from non-recurring items) of $9.31 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $9.13. Results were hurt by the coronavirus-induced weakness in air-travel demand.
Even though operating revenues of $1,475 million slumped 87.1% year over year, the same beat the Zacks Consensus Estimate of $1,217 million. This year-over-year plunge was due to the 93.5% drop in passenger revenues. However, the carrier’s move to operate cargo-only flights in the face of declining passenger revenues paid off as revenues from the same surged 36.3% year over year. Meanwhile revenues from other sources declined 36.9% in the June quarter.
United Airlines Holdings Inc Price, Consensus and EPS Surprise
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 46.9% year over year to 7.6 cents. Total revenue per available seat mile, however, increased 5.7%. On a consolidated basis, average yield per revenue passenger mile jumped 37.8% from the year-ago quarter.
During the quarter under review, consolidated airline traffic, measured in revenue passenger miles, tumbled 95.3% year over year. Capacity (or available seat miles) contracted 87.8%. Consolidated load factor (percentage of seat occupancy) deteriorated 5290 percentage points to 33.1% as traffic decline was more than capacity contraction. Meanwhile, average fuel price per gallon fell 45.4% year over year to $1.18. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed were down 81.5% to 204 million.
Total adjusted operating expenses declined 41.4% year over year to $4,263 million in the reported quarter. Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, third-party business expenses, profit sharing and special charges escalated in excess of 100%.
United Airlines exited the second quarter with cash and cash equivalents of $6,505 million compared with $2,762 million at 2019 end. Long-term debt at the end of the reported quarter was $14,318 million compared with $13,145 million at 2019 end.
Other Details
During the June quarter, cash burn averaged $40 million a day including $3 million of principal payments and severance expenses. This presently Zacks Rank #3 (Hold) carrier expects average daily cash burn to be approximately $25 million for the September quarter (including $6 million of principal payments and severance expenses). Liquidity at the end of the third quarter is forecast to be more than $18 billion. Consolidated system capacity is expected to tank 65% year over year during the period. Adjusted capital expenditures for the current year are anticipated to be approximately $3.7 billion.
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter earnings reports of American Airlines (AAL - Free Report) and Southwest Airlines (LUV - Free Report) on Jul 23. Both stocks carry the same Zacks Rank as United Airlines at present.
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United Airlines (UAL) Posts Q2 Loss, Sees a Dip in Load Factor
With coronavirus continuing to wreak havoc on the airline space, United Airlines (UAL - Free Report) became the second carrier after Delta Air Lines (DAL - Free Report) to report a loss for the second quarter of 2020.
United Airlines incurred a loss (excluding $3.52 from non-recurring items) of $9.31 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $9.13. Results were hurt by the coronavirus-induced weakness in air-travel demand.
Even though operating revenues of $1,475 million slumped 87.1% year over year, the same beat the Zacks Consensus Estimate of $1,217 million. This year-over-year plunge was due to the 93.5% drop in passenger revenues. However, the carrier’s move to operate cargo-only flights in the face of declining passenger revenues paid off as revenues from the same surged 36.3% year over year. Meanwhile revenues from other sources declined 36.9% in the June quarter.
United Airlines Holdings Inc Price, Consensus and EPS Surprise
United Airlines Holdings Inc price-consensus-eps-surprise-chart | United Airlines Holdings Inc Quote
Operating Results
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 46.9% year over year to 7.6 cents. Total revenue per available seat mile, however, increased 5.7%. On a consolidated basis, average yield per revenue passenger mile jumped 37.8% from the year-ago quarter.
During the quarter under review, consolidated airline traffic, measured in revenue passenger miles, tumbled 95.3% year over year. Capacity (or available seat miles) contracted 87.8%. Consolidated load factor (percentage of seat occupancy) deteriorated 5290 percentage points to 33.1% as traffic decline was more than capacity contraction. Meanwhile, average fuel price per gallon fell 45.4% year over year to $1.18. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed were down 81.5% to 204 million.
Total adjusted operating expenses declined 41.4% year over year to $4,263 million in the reported quarter. Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, third-party business expenses, profit sharing and special charges escalated in excess of 100%.
United Airlines exited the second quarter with cash and cash equivalents of $6,505 million compared with $2,762 million at 2019 end. Long-term debt at the end of the reported quarter was $14,318 million compared with $13,145 million at 2019 end.
Other Details
During the June quarter, cash burn averaged $40 million a day including $3 million of principal payments and severance expenses. This presently Zacks Rank #3 (Hold) carrier expects average daily cash burn to be approximately $25 million for the September quarter (including $6 million of principal payments and severance expenses). Liquidity at the end of the third quarter is forecast to be more than $18 billion. Consolidated system capacity is expected to tank 65% year over year during the period. Adjusted capital expenditures for the current year are anticipated to be approximately $3.7 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Airline Releases
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter earnings reports of American Airlines (AAL - Free Report) and Southwest Airlines (LUV - Free Report) on Jul 23. Both stocks carry the same Zacks Rank as United Airlines at present.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>