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United Airlines (UAL) Down Despite Q3 Earnings & Revenue Beat
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United Airlines (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year.
Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand. This was driven by a 14.6% rise in passenger revenues (accounting for 92.5% of the top line) to $13,349 million. More than 44 million passengers traveled on UAL flights in the third quarter.
Cargo revenues fell 33.1% year over year to $333 million. Revenues from other sources jumped 10.5% from the third quarter of 2022 to $802 million.
Despite the earnings and revenue beat, UAL shares decreased in after-market trading on Oct 17 due to weak adjusted earnings per share forecast for fourth-quarter 2023. The tepid projection was due to high costs. The suspension of flights to Tel Aviv is likely to raise non-fuel costs further in the fourth quarter.
The Chicago-based carrier expects fourth-quarter adjusted earnings per share in the band of $1.50-$1.80 per share. The Zacks Consensus Estimate for fourth-quarter earnings per share is currently pegged at $2.26.
Other Details of Q3
Below, we present all comparisons (in % terms) with the third quarter of 2022 figures unless otherwise stated.
Consolidated passenger revenue per available seat mile (a key measure of unit revenues) inched down 1%. Total revenue per available seat mile dipped 2.8% to 18.49 cents. The average yield per revenue passenger mile remained flat at 19.72 cents.
Consolidated airline traffic, measured in revenue passenger miles, grew 14.6%. Capacity, measured in available seat miles, expanded 15.7%. Consolidated load factor (percentage of seat occupancy) contracted 0.9 percentage points to 86.4%. Our third-quarter estimate for load factor was 90.3%.
Average aircraft fuel price per gallon fell 22.6% to $2.95, lower than our expectation of $3.01. Fuel gallons consumed were up 14.9%.
Operating expenses (on a reported basis) increased 11.6% to $12,745 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.6% to 11.51 cents.
UAL exited the third quarter with cash and cash equivalents of $7,478 million compared with $7,166 million at the end of 2022. Long-term debt was $25,932 million compared with $28,283 million at the end of 2022.
Outlook
Management has highlighted two scenarios while giving fourth-quarter 2023 outlook.
Scenario 1 – Flights to Tel Aviv will remain suspended for October only.
For the fourth quarter of 2023, United Airlines envisions capacity to improve by almost 15.5% from the year-ago reported figure. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is suggested to increase roughly 3.5% mainly due to high labor costs.
Total revenues are anticipated to climb 10.5% year over year. UAL projects fourth-quarter EPS to be $1.80. It forecasts average aircraft fuel price per gallon to be $3.28.
Scenario 2 – Flights to Tel Aviv will remain suspended through year end.
United Airlines expects capacity to improve by almost 14% from the year-ago reported figure. Total revenues are anticipated to grow 9% year over year. Adjusted CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is projected to register year-over-year growth of 5% in this scenario..
Notably, UAL has significant exposure to Israel. It envisions fourth-quarter EPS to be $1.50 in this scenario. It forecasts the average aircraft fuel price per gallon to be $3.28, even in this scenario.
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
J.B. Hunt Transport Services' (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 17.6% year over year. Results were hurt by falling freight rates. There was a a 38% drop in volumes in JBHT's freight brokerage integrated capacity solutions segment and a 20% drop in stops in its final miles services business.
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United Airlines (UAL) Down Despite Q3 Earnings & Revenue Beat
United Airlines (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year.
Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand. This was driven by a 14.6% rise in passenger revenues (accounting for 92.5% of the top line) to $13,349 million. More than 44 million passengers traveled on UAL flights in the third quarter.
Cargo revenues fell 33.1% year over year to $333 million. Revenues from other sources jumped 10.5% from the third quarter of 2022 to $802 million.
Despite the earnings and revenue beat, UAL shares decreased in after-market trading on Oct 17 due to weak adjusted earnings per share forecast for fourth-quarter 2023. The tepid projection was due to high costs. The suspension of flights to Tel Aviv is likely to raise non-fuel costs further in the fourth quarter.
The Chicago-based carrier expects fourth-quarter adjusted earnings per share in the band of $1.50-$1.80 per share. The Zacks Consensus Estimate for fourth-quarter earnings per share is currently pegged at $2.26.
Other Details of Q3
Below, we present all comparisons (in % terms) with the third quarter of 2022 figures unless otherwise stated.
Consolidated passenger revenue per available seat mile (a key measure of unit revenues) inched down 1%. Total revenue per available seat mile dipped 2.8% to 18.49 cents. The average yield per revenue passenger mile remained flat at 19.72 cents.
Consolidated airline traffic, measured in revenue passenger miles, grew 14.6%. Capacity, measured in available seat miles, expanded 15.7%. Consolidated load factor (percentage of seat occupancy) contracted 0.9 percentage points to 86.4%. Our third-quarter estimate for load factor was 90.3%.
Average aircraft fuel price per gallon fell 22.6% to $2.95, lower than our expectation of $3.01. Fuel gallons consumed were up 14.9%.
Operating expenses (on a reported basis) increased 11.6% to $12,745 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.6% to 11.51 cents.
UAL exited the third quarter with cash and cash equivalents of $7,478 million compared with $7,166 million at the end of 2022. Long-term debt was $25,932 million compared with $28,283 million at the end of 2022.
Outlook
Management has highlighted two scenarios while giving fourth-quarter 2023 outlook.
Scenario 1 – Flights to Tel Aviv will remain suspended for October only.
For the fourth quarter of 2023, United Airlines envisions capacity to improve by almost 15.5% from the year-ago reported figure. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is suggested to increase roughly 3.5% mainly due to high labor costs.
Total revenues are anticipated to climb 10.5% year over year. UAL projects fourth-quarter EPS to be $1.80. It forecasts average aircraft fuel price per gallon to be $3.28.
Scenario 2 – Flights to Tel Aviv will remain suspended through year end.
United Airlines expects capacity to improve by almost 14% from the year-ago reported figure. Total revenues are anticipated to grow 9% year over year. Adjusted CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is projected to register year-over-year growth of 5% in this scenario..
Notably, UAL has significant exposure to Israel. It envisions fourth-quarter EPS to be $1.50 in this scenario. It forecasts the average aircraft fuel price per gallon to be $3.28, even in this scenario.
Currently, United Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
J.B. Hunt Transport Services' (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 17.6% year over year. Results were hurt by falling freight rates. There was a a 38% drop in volumes in JBHT's freight brokerage integrated capacity solutions segment and a 20% drop in stops in its final miles services business.