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United Airlines (UAL) Stock Drops Post Q2 Earnings Miss
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United Airlines’ (UAL - Free Report) second-quarter 2022 earnings (excluding 43 cents from non-recurring items) of $1.43 per share fell short of the Zacks Consensus Estimate of $1.86. Escalated operating expenses induced the earnings miss. Consequently, shares declined in after-market trading on Jul 20. In the year-ago quarter, UAL incurred a loss of $3.91 per share when air-travel demand was not as buoyant as in the current scenario. The second quarter of 2022 was the first profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,112 million marginally beat the Zacks Consensus Estimate of $12,033.7 million. Revenues increased more than 100% year over year owing to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 6.2% from second-quarter 2019 (pre-coronavirus) levels.
The massive year-over-year increase in the top line was driven by more than a 100% rise in passenger revenues (accounting for 89.4% of the top line) to $10,829 million. Moreover, passenger revenues inched up 3.3% from the second-quarter 2019 reading. Cargo revenues skyrocketed 94.6% from second-quarter 2019 actuals to $574 million. Revenues from other sources increased 14.2% from the second-quarter 2019 tally to $709 million.
Operating Results
Below, we present all comparisons (in % terms) with the second-quarter 2019 figures.
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 20.8%. Total revenue per available seat mile (TRASM) rose 24.3% to 19.35 cents. On a consolidated basis, average yield per revenue passenger mile was up 19.8% to 19.94 cents.
Consolidated airline traffic, measured in revenue passenger miles, dropped 13.8%, while capacity, measured in available seat miles, fell 14.5%. Consolidated load factor (percentage of seat occupancy) inched up 0.7 percentage points to 86.7% as the traffic decline was less than the capacity contraction. Average aircraft fuel price per gallon jumped 93.5% to $4.18. Fuel gallons consumed were down 17.2%.
Adjusted operating expenses were flat at $7,275 million. Operating expenses (on a reported basis) increased 13.1% to $11,234 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges ascended 17%.
United Airlines, currently carrying a Zacks Rank #3 (Hold), exited the second quarter with cash and cash equivalents of $16,885 million compared with $18,283 million at the end of 2021. Long-term debt at the end of the reported quarter was $29,175 million compared with $30,361 million at the end of December 2021. UAL exited the quarter with total available liquidity of $22 billion.
For the third quarter, United Airlines expects capacity to decline around 11% from the third-quarter level of 2019. The metric is anticipated to decline approximately 10% from the fourth-quarter 2019 actuals. Current-year capacity is likely to be 13% less than the 2019 actuals. TRASM is estimated to climb in the 24-26% band in the September quarter from the comparable period’s number in 2019. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is anticipated to increase 16-17% and roughly 14% in the September and December quarters, respectively, from the corresponding 2019 levels. The metric is anticipated to increase approximately 16% and 5%, in 2022 and 2023, respectively, from the 2019 actuals.
Total operating revenues in the third quarter are likely to increase 11% from the September-quarter level of 2019. UAL forecasts the average aircraft fuel price per gallon to be $3.81 in the third quarter. Adjusted capital expenditures are predicted to be $5.2 billion for 2022. Adjusted operating margin is expected to be approximately 10% in the September quarter. UAL expects to be profitable for the full year. UAL is on track to achieve a pre-tax margin of approximately 9% in 2023 and about 14% in 2026.
Sectorial Snapshots
Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) recently reported second-quarter 2022 results.
Delta’s second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share lagged the Zacks Consensus Estimate of $1.71. Escalated operating expenses caused this earnings miss. Multiple flight cancellations in May and June also hurt results. In the year-ago quarter, DAL incurred a loss of $1.07 per share when air-travel demand was not as buoyant as at present.
Delta’s revenues came in at $13,824 million, beating the Zacks Consensus Estimate of $13,608.9 million and soaring 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows.
J.B. Hunt’s earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year. Total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million.
The top line at JBHT jumped 32% year over year on the back of strength across all segments. Total operating revenues, excluding fuel surcharges, rose 21.2% year over year.
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United Airlines (UAL) Stock Drops Post Q2 Earnings Miss
United Airlines’ (UAL - Free Report) second-quarter 2022 earnings (excluding 43 cents from non-recurring items) of $1.43 per share fell short of the Zacks Consensus Estimate of $1.86. Escalated operating expenses induced the earnings miss. Consequently, shares declined in after-market trading on Jul 20. In the year-ago quarter, UAL incurred a loss of $3.91 per share when air-travel demand was not as buoyant as in the current scenario. The second quarter of 2022 was the first profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,112 million marginally beat the Zacks Consensus Estimate of $12,033.7 million. Revenues increased more than 100% year over year owing to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 6.2% from second-quarter 2019 (pre-coronavirus) levels.
The massive year-over-year increase in the top line was driven by more than a 100% rise in passenger revenues (accounting for 89.4% of the top line) to $10,829 million. Moreover, passenger revenues inched up 3.3% from the second-quarter 2019 reading. Cargo revenues skyrocketed 94.6% from second-quarter 2019 actuals to $574 million. Revenues from other sources increased 14.2% from the second-quarter 2019 tally to $709 million.
Operating Results
Below, we present all comparisons (in % terms) with the second-quarter 2019 figures.
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 20.8%. Total revenue per available seat mile (TRASM) rose 24.3% to 19.35 cents. On a consolidated basis, average yield per revenue passenger mile was up 19.8% to 19.94 cents.
Consolidated airline traffic, measured in revenue passenger miles, dropped 13.8%, while capacity, measured in available seat miles, fell 14.5%. Consolidated load factor (percentage of seat occupancy) inched up 0.7 percentage points to 86.7% as the traffic decline was less than the capacity contraction. Average aircraft fuel price per gallon jumped 93.5% to $4.18. Fuel gallons consumed were down 17.2%.
Adjusted operating expenses were flat at $7,275 million. Operating expenses (on a reported basis) increased 13.1% to $11,234 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges ascended 17%.
United Airlines, currently carrying a Zacks Rank #3 (Hold), exited the second quarter with cash and cash equivalents of $16,885 million compared with $18,283 million at the end of 2021. Long-term debt at the end of the reported quarter was $29,175 million compared with $30,361 million at the end of December 2021. UAL exited the quarter with total available liquidity of $22 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Outlook
For the third quarter, United Airlines expects capacity to decline around 11% from the third-quarter level of 2019. The metric is anticipated to decline approximately 10% from the fourth-quarter 2019 actuals. Current-year capacity is likely to be 13% less than the 2019 actuals. TRASM is estimated to climb in the 24-26% band in the September quarter from the comparable period’s number in 2019. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is anticipated to increase 16-17% and roughly 14% in the September and December quarters, respectively, from the corresponding 2019 levels. The metric is anticipated to increase approximately 16% and 5%, in 2022 and 2023, respectively, from the 2019 actuals.
Total operating revenues in the third quarter are likely to increase 11% from the September-quarter level of 2019. UAL forecasts the average aircraft fuel price per gallon to be $3.81 in the third quarter. Adjusted capital expenditures are predicted to be $5.2 billion for 2022. Adjusted operating margin is expected to be approximately 10% in the September quarter. UAL expects to be profitable for the full year. UAL is on track to achieve a pre-tax margin of approximately 9% in 2023 and about 14% in 2026.
Sectorial Snapshots
Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) recently reported second-quarter 2022 results.
Delta’s second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share lagged the Zacks Consensus Estimate of $1.71. Escalated operating expenses caused this earnings miss. Multiple flight cancellations in May and June also hurt results. In the year-ago quarter, DAL incurred a loss of $1.07 per share when air-travel demand was not as buoyant as at present.
Delta’s revenues came in at $13,824 million, beating the Zacks Consensus Estimate of $13,608.9 million and soaring 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows.
J.B. Hunt’s earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year. Total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million.
The top line at JBHT jumped 32% year over year on the back of strength across all segments. Total operating revenues, excluding fuel surcharges, rose 21.2% year over year.