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Travel-Demand Woes to Ail United Airlines (UAL) Q1 Earnings
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Passenger revenues account for bulk of United Airlines’ (UAL - Free Report) top line (91.6% in 2019). However, the same is likely to have weakened in March particularly, the final month of the first-quarter 2020 earnings season due to waning air-travel demand. This, in turn, might have hurt the carrier’s overall quarterly performance, which can be confirmed by the company when the company reports earnings results on Apr 30.
In 2019, domestic revenues (United States and Canada) accounted for 62.3% of the top line. Atlantic, Pacific and Latin American regions reflected 17.1%, 11.9% and 8.7%, respectively, of revenue contribution last year. Passenger revenues are recognized from transporting passengers on United Airlines flights apart from those carried on its regional flights.
Solid Air-Travel Demand Aided Q4 Top Line
During the final quarter of 2019, passenger revenues, which represented bulk (91.2%) of the top line, rose 3.9% year over year. Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) inched up 0.8% year over year to 13.98 cents. Total revenue per available seat mile increased 0.7% year over year to 15.33 cents. On a consolidated basis, average yield per revenue passenger mile ascended 1% from the year-ago quarter’s level.
Moreover, consolidated airline traffic, measured in revenue passenger miles, climbed 2.9% year over year. Capacity (or available seat miles) also expanded 3.1%. Consolidated load factor (percentage of seat occupancy) deteriorated 20 basis points to 82.5% as capacity expansion outweighed traffic growth. Meanwhile, average fuel price per gallon (on a consolidated basis) decreased 8.7% year over year to $2.1.
Passenger Revenues to Suffer a Decline in Q1
Even though passenger traffic is likely to have been strong in January and February, the fact that air-travel demand took a beating in March as coronavirus was declared a pandemic by the World Health Organization during that time, is likely to have weighed on United Airlines’ top line in the to-be-reported quarter. Notably, the Zacks Consensus Estimate for United Airlines’ first-quarter 2020 consolidated passenger revenues stands at $8,742 million, indicating a 12% decline from the figure reported in the sequential quarter.
While the Zacks Consensus Estimate for passenger revenues from domestic operations implies a sequential decline of 18.9%, the consensus mark for international passenger revenues hints a 7.2% fall from the respective year-ago reported figures.
To compensate the extremely low-demand scenario as many countries are on lockdown and wide-spread travel restrictions are in place, this Zacks Rank #3 (Hold) carrier is trimming its capacity, inducing cancellation of multiple flights as a result. With traffic descending at a faster rate than capacity cuts, load factor is likely to have declined in the first quarter.
Consequently, the Zacks Consensus Estimate for United Airlines’ first-quarter consolidated passenger load factor stands at 79, indicating a 4.8% decline from the figure reported in fourth-quarter 2019. In fact, this key metric is likely to have fallen due to softness, both on the international and domestic front. As a result, international load factor is expected to have dipped 2.5% sequentially to 79. Also, domestic load factor is expected to have slipped 2.4% sequentially to 82.
Overall Earnings & Revenue Projections
Due to the coronavirus-induced dismal air-travel demand, the Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of $3.36. Meanwhile, the company delivered earnings per share of $2.67 in fourth-quarter 2019. For quarterly sales, the consensus mark is pegged at $7.99 billion, suggesting a 16.7% decrease from the figure reported in the first quarter of 2019.
Bleak Air-Travel Demand Scenario a Bane
The coronavirus-induced dwindling air-travel demand is likely to hurt results for all airline players. Notably, Delta Air Lines (DAL - Free Report) , which kicked off the earnings season for the airline industry on Apr 22, suffered its first quarterly loss since 2010, mainly due to 18.2% drop in passenger revenues. Other airline stocks like American Airlines (AAL - Free Report) and JetBlue Airways (JBLU - Free Report) are also likely to have been dealt a blow by draining passenger revenues. Both companies are set to report first-quarter results on Apr 30 and May 7, respectively.
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Travel-Demand Woes to Ail United Airlines (UAL) Q1 Earnings
Passenger revenues account for bulk of United Airlines’ (UAL - Free Report) top line (91.6% in 2019). However, the same is likely to have weakened in March particularly, the final month of the first-quarter 2020 earnings season due to waning air-travel demand. This, in turn, might have hurt the carrier’s overall quarterly performance, which can be confirmed by the company when the company reports earnings results on Apr 30.
In 2019, domestic revenues (United States and Canada) accounted for 62.3% of the top line. Atlantic, Pacific and Latin American regions reflected 17.1%, 11.9% and 8.7%, respectively, of revenue contribution last year. Passenger revenues are recognized from transporting passengers on United Airlines flights apart from those carried on its regional flights.
Solid Air-Travel Demand Aided Q4 Top Line
During the final quarter of 2019, passenger revenues, which represented bulk (91.2%) of the top line, rose 3.9% year over year. Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) inched up 0.8% year over year to 13.98 cents. Total revenue per available seat mile increased 0.7% year over year to 15.33 cents. On a consolidated basis, average yield per revenue passenger mile ascended 1% from the year-ago quarter’s level.
Moreover, consolidated airline traffic, measured in revenue passenger miles, climbed 2.9% year over year. Capacity (or available seat miles) also expanded 3.1%. Consolidated load factor (percentage of seat occupancy) deteriorated 20 basis points to 82.5% as capacity expansion outweighed traffic growth. Meanwhile, average fuel price per gallon (on a consolidated basis) decreased 8.7% year over year to $2.1.
Passenger Revenues to Suffer a Decline in Q1
Even though passenger traffic is likely to have been strong in January and February, the fact that air-travel demand took a beating in March as coronavirus was declared a pandemic by the World Health Organization during that time, is likely to have weighed on United Airlines’ top line in the to-be-reported quarter. Notably, the Zacks Consensus Estimate for United Airlines’ first-quarter 2020 consolidated passenger revenues stands at $8,742 million, indicating a 12% decline from the figure reported in the sequential quarter.
While the Zacks Consensus Estimate for passenger revenues from domestic operations implies a sequential decline of 18.9%, the consensus mark for international passenger revenues hints a 7.2% fall from the respective year-ago reported figures.
To compensate the extremely low-demand scenario as many countries are on lockdown and wide-spread travel restrictions are in place, this Zacks Rank #3 (Hold) carrier is trimming its capacity, inducing cancellation of multiple flights as a result. With traffic descending at a faster rate than capacity cuts, load factor is likely to have declined in the first quarter.
Consequently, the Zacks Consensus Estimate for United Airlines’ first-quarter consolidated passenger load factor stands at 79, indicating a 4.8% decline from the figure reported in fourth-quarter 2019. In fact, this key metric is likely to have fallen due to softness, both on the international and domestic front. As a result, international load factor is expected to have dipped 2.5% sequentially to 79. Also, domestic load factor is expected to have slipped 2.4% sequentially to 82.
Overall Earnings & Revenue Projections
Due to the coronavirus-induced dismal air-travel demand, the Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of $3.36. Meanwhile, the company delivered earnings per share of $2.67 in fourth-quarter 2019. For quarterly sales, the consensus mark is pegged at $7.99 billion, suggesting a 16.7% decrease from the figure reported in the first quarter of 2019.
Bleak Air-Travel Demand Scenario a Bane
The coronavirus-induced dwindling air-travel demand is likely to hurt results for all airline players. Notably, Delta Air Lines (DAL - Free Report) , which kicked off the earnings season for the airline industry on Apr 22, suffered its first quarterly loss since 2010, mainly due to 18.2% drop in passenger revenues. Other airline stocks like American Airlines (AAL - Free Report) and JetBlue Airways (JBLU - Free Report) are also likely to have been dealt a blow by draining passenger revenues. Both companies are set to report first-quarter results on Apr 30 and May 7, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>