United Airlines Q4 FY 2021 Earnings Report Preview: What to Look For From UAL

Focus on UAL load factor

Key Takeaways

  • Analysts estimate adjusted EPS of -$1.99 vs. -$7.00 in Q4 2020.
  • Load factor is expected to improve significantly YOY, though not to pre-pandemic levels.
  • Revenue is expected to more than double YOY amid recovering travel demand.

United Airlines Holdings Inc. (UAL) has suffered seven straight quarters of reported losses through the third quarter of 2021 as the COVID-19 pandemic has inflicted huge shocks on its costs and airline scheduling. Those losses, totaling billions of dollars, have continued even as its revenue recently has sharply rebounded due to rising traveler demand.

Investors will look closely at how fast United Airlines can return to profitability when the company reports earnings on Jan. 20, 2022 for Q4 FY 2021. The news may be mixed. For Q4, analysts predict that the company's adjusted loss per share will narrow sharply year-over-year (YOY). They expect revenue to more than double YOY, but fall short of pre-pandemic levels.

Investors will also look to United Airlines' load factor, a key metric used by air carriers to gauge what percentage of paid-passenger seating capacity is being filled. Analysts estimate that United Airlines' load factor will rise to its highest level in two years.

United Airlines shares have been volatile in the past year. The company surged ahead of the market early in 2021, reaching a high point in March. The shares then pulled back briefly before ascending again in May. The stock plunged sharply early in the summer. Since that time, the stock has lagged behind the market, struggling to preserve any gains. As of Jan. 18, 2022, United stock has underperformed the broader market, providing a 1-year trailing total return of 5.5% as compared with 21.9% for the S&P 500.

One Year Total Return for S&P 500 and United Airlines
Source: TradingView.

United Airlines Earnings History

As mentioned, United Airlines' business and earnings have been significantly impacted by the COVID-19 pandemic. Between Q1 FY 2020 and Q3 FY 2021, the company posted adjusted losses per share for seven consecutive quarters. After posting strong profit gains in each quarter of FY 2019, the airline reported an adjusted loss per share of $2.57 in Q1 FY 2020. That adjusted loss per share widened to $9.31 in Q2 FY 2020, its worst quarterly loss in recent years. United Airlines' losses have narrowed sharply in Q2 and Q3 of FY 2021 compared to the same period a year earlier. For Q4 FY 2021, analysts expect the company to post adjusted EPS of -$1.99. While that loss would be more than double the loss in Q3 FY 2021, it would mark a significant improvement on a YOY basis.

United Airlines' revenue also fell by a substantial margin early in the pandemic and has been gradually recovering. The company's revenue fell 87.1% in Q2 FY 2020, its steepest recent decline. The size of the revenue declines lessened in each of the next three quarters through Q1 FY 2021, followed by a sharp rebound. Revenue rose 270.1% in Q1 and 211.4% in Q3. Now, analysts expect slightly slower growth, estimating that revenue will climb by 133.7% YOY for Q4 FY 2021. Despite this substantial improvement, Q4 FY 2021 revenue is still expected to be far below pre-pandemic levels.

United Airlines Key Stats
  Estimate for Q4 FY 2021 Q4 FY 2020 Q4 FY 2019
Adjusted EPS ($) -1.99 -7.00  2.67
Revenue ($B) 8.0 3.4 10.9
Load Factor 77.4% 55.6% 82.5%

Source: Visible Alpha

The Key Metric

As mentioned above, investors will also be focused on United Airlines' load factor, a key metric indicating the percentage of a carrier's available seats that are filled with paying passengers. A high load factor, as opposed to a low load factor, indicates that a high percentage of seats are occupied by passengers. Because the costs of sending an aircraft into flight are relatively the same whether there are 50 people aboard or 100, airlines have a strong incentive to fill as many seats as possible by selling more tickets. Higher load factors mean an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable. The pandemic has led to a reduction in air travel, leaving airlines with high fixed costs amid falling load factors and revenues, the combination of which is causing steep losses.

From Q3 FY 2018 through Q4 FY 2019, United Airlines' load factor ranged from 80.9% to 86.1%. Load factor dipped to 70.9% at the start of the pandemic in Q1 FY 2020 and then fell precipitously to 33.1% in Q2 FY 2020. Since that time, United Airlines has recovered most of the lost ground. Load factor has steadily increased on a sequential basis, climbing as high as 76.1% in Q3 FY 2021. Analysts expect a load factor of 77.4% for Q4 FY 2021. This represents significant growth on a YOY basis, but still far below normal levels.

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  1. Visible Alpha. "Financial Data." Accessed Jan. 18, 2022.

  2. United Airlines Holdings Inc. "4Q21/FY21 Earnings Call." Accessed Jan. 18, 2022.

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