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United Airlines (UAL) Expects to Incur Loss in Q1, Stock Down
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Shares of United Airlines Holdings, Inc. (UAL - Free Report) declined 6% in after-market trading on Mar 13. The downside was owing to the bearish earnings guidance provided by UAL for the first quarter of 2023 due to high fuel costs and soft demand.
For the first quarter of 2023, United Airlines now anticipates loss per share of 60 cents-$1.00 against the prior expected band of earnings per share of 50 cents-$1.00 (provided with the company’s fourth-quarter 2022 results on Jan 17). The Zacks Consensus Estimate for the first quarter is pegged at 68 cents per share.
UAL expects loss in the first quarter due to an expense related to the new collective bargaining deal with employees represented by the Air Line Pilots Association. This associated expense shifted from the second quarter of 2023 to the first quarter.
Given this, UAL now anticipates first-quarter 2023 consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, to be flat to up 1% on a year-over-year basis (prior view: a decline in the range of 3-4%).
Total revenue per available seat mile for the first quarter of 2023 is now expected to increase 22-23% year over year (prior view: up almost 25%). The downbeat view is due to weaker demand growth witnessed in January and February 2023 compared to other months.
UAL now forecasts first-quarter 2023 average aircraft fuel price per gallon between $3.31 and $3.41 (prior view: $3.19).
Management expects first-quarter 2023 total operating revenues to be up almost 51% year over year (prior view: up 50% year over year). Notably, higher capacity in the quarter is contributing to UAL’s top-line performance. As a result, the capacity is now expected to improve 23% from the year-ago reported figure (prior view: up 20%).
Further, the company expects its second quarter to benefit from seasonal factors. Total operating revenues are anticipated to be up in the mid-teens from the second quarter of 2022.
For 2023, CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is still expected to remain flat. UAL continues to expect 2023 earnings per share in the $10-$12 band. The Zacks Consensus Estimate is pegged at $8.30.
The adjusted pre-tax margin is still expected to be 9%.
Zacks Rank & Other Stocks to Consider
Currently, United Airlines carries a Zacks Rank #2 (Buy).
Copa Holdings has an expected earnings growth rate of 39.83% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 21.1% over the past 90 days. Shares of CPA have soared 13.3% over the past three months.
Alaska Air has an expected earnings growth rate of 32.64% for the current year. ALK delivered a trailing four-quarter earnings surprise of 8.98%, on average.
The Zacks Consensus Estimate for ALK’s current-year earnings has improved 11.4% over the past 90 days. Shares of ALK have risen 0.8% over the past three months.
AAL has an expected earnings growth rate of more than 100% for the current year. AAL delivered a trailing four-quarter earnings surprise of 7.79%, on average.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 31.1% over the past 90 days. Shares of AAL have gained 15.8% over the past three months.
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United Airlines (UAL) Expects to Incur Loss in Q1, Stock Down
Shares of United Airlines Holdings, Inc. (UAL - Free Report) declined 6% in after-market trading on Mar 13. The downside was owing to the bearish earnings guidance provided by UAL for the first quarter of 2023 due to high fuel costs and soft demand.
For the first quarter of 2023, United Airlines now anticipates loss per share of 60 cents-$1.00 against the prior expected band of earnings per share of 50 cents-$1.00 (provided with the company’s fourth-quarter 2022 results on Jan 17). The Zacks Consensus Estimate for the first quarter is pegged at 68 cents per share.
UAL expects loss in the first quarter due to an expense related to the new collective bargaining deal with employees represented by the Air Line Pilots Association. This associated expense shifted from the second quarter of 2023 to the first quarter.
Given this, UAL now anticipates first-quarter 2023 consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, to be flat to up 1% on a year-over-year basis (prior view: a decline in the range of 3-4%).
Total revenue per available seat mile for the first quarter of 2023 is now expected to increase 22-23% year over year (prior view: up almost 25%). The downbeat view is due to weaker demand growth witnessed in January and February 2023 compared to other months.
UAL now forecasts first-quarter 2023 average aircraft fuel price per gallon between $3.31 and $3.41 (prior view: $3.19).
Management expects first-quarter 2023 total operating revenues to be up almost 51% year over year (prior view: up 50% year over year). Notably, higher capacity in the quarter is contributing to UAL’s top-line performance. As a result, the capacity is now expected to improve 23% from the year-ago reported figure (prior view: up 20%).
Further, the company expects its second quarter to benefit from seasonal factors. Total operating revenues are anticipated to be up in the mid-teens from the second quarter of 2022.
For 2023, CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is still expected to remain flat. UAL continues to expect 2023 earnings per share in the $10-$12 band. The Zacks Consensus Estimate is pegged at $8.30.
The adjusted pre-tax margin is still expected to be 9%.
Zacks Rank & Other Stocks to Consider
Currently, United Airlines carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) and American Airlines (AAL - Free Report) . Copa Holdings presently sports a Zacks Rank #1 (Strong Buy), while Alaska Air and American Airlines currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 39.83% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 21.1% over the past 90 days. Shares of CPA have soared 13.3% over the past three months.
Alaska Air has an expected earnings growth rate of 32.64% for the current year. ALK delivered a trailing four-quarter earnings surprise of 8.98%, on average.
The Zacks Consensus Estimate for ALK’s current-year earnings has improved 11.4% over the past 90 days. Shares of ALK have risen 0.8% over the past three months.
AAL has an expected earnings growth rate of more than 100% for the current year. AAL delivered a trailing four-quarter earnings surprise of 7.79%, on average.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 31.1% over the past 90 days. Shares of AAL have gained 15.8% over the past three months.