United Airlines Q2 2022 Earnings Report Recap

^{Source: Predictions based on analysts’ consensus from Visible Alpha}

United Airlines (UAL) Financial Results: Analysis

United Airlines Holdings Inc. (UAL) reported Q2 FY 2022 earnings results that missed analysts' estimates. The company reported its first adjusted earnings per share (EPS) since the start of the COVID-19 pandemic. However, adjusted EPS still fell considerably short of analyst predictions. United's revenue also missed expectations, despite marking the highest Q2 revenue in the company's history.

UAL Load Factor

United Airlines' load factor rose significantly to 86.7%, solidly beating analyst predictions. Load factor is a key metric used in the airline industry to indicate the percentage of a carrier's available seats that are filled with paying 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 that an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable. As of this quarter, United has not only returned to but even exceeded pre-pandemic levels. Load factor was 86.0% for Q2 FY 2019, the last Q2 period prior to the start of COVID-19.

United Outlook and Stock Performance

United Chief Executive Officer (CEO) Scott Kirby said the company faces three primary risks in the next six to 18 months. These include industrywide operational issues that could limit overall system capacity, record high fuel prices, and the possibility of a global recession. Despite higher fuel prices and overall costs, the company sees higher revenue related to these factors. Kirby said the company expects to meet its goal of 9% adjusted pretax margin in 2023.

Shares of United stock fell by more than 7% in extended hours following the earnings release Wednesday. As of July 20, United stock had slightly underperformed the broader market in the last year. United shares have provided a 1-year trailing total return of -10.0% compared with -8.9% for the S&P 500 over the same period.

United Airlines' next earnings report (for Q3 FY 2022) is expected to be released on Oct. 18, 2022.