Key Takeaways

  • Load factor beat analyst expectations, and although it is well above the lows reached during the pandemic, it remains below pre-pandemic levels.
  • Load factor measures the percentage of an airline's seating capacity that is filled with paying passengers.
  • The fast-spreading Delta variant could dampen recovery in travel demand.
United Airlines Earnings Results
Metric  Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat -$3.91 -$4.12 
Revenue Match $5.5B $5.5B
Load Factor  Beat 72.0% 70.4% 

Source: Predictions based on analysts' consensus from Visible Alpha

United Airlines (UAL) Financial Results: Analysis

United Airlines Holdings, Inc. (UAL) reported Q2 FY 2021 earnings that beat analysts' forecasts, posting a narrower adjusted loss per share than expected. Revenue matched expectations, surging 270.9% from the year-ago quarter's pandemic-depressed low. The airline's load factor surpassed expectations. The company's shares were down less than 1% in after-hours trading on Tuesday. Over the past year, United Airlines' shares have provided a total return of 43.3%, above the S&P 500's total return of 32.9%.

UAL Load Factor

United Airlines' load factor more than doubled from the year-ago quarter's low, which was severely depressed due to the COVID-19 pandemic and related travel restrictions. Still, at 72.0%, the company's load factor remains below pre-pandemic levels. 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. 

Airlines have reported a significant increase in bookings since the spring amid vaccine rollouts and the relaxing of COVID-related travel restrictions. However, there is a growing risk that the fast-spreading Delta variant could derail the recovery for airlines. Cases and hospitalizations are on the rise in every U.S. state. But that risk did not prevent United Airlines from announcing the purchase of 270 new Boeing and Airbus narrow-body jets last month. It was the company's largest combined order ever and the biggest by any one carrier over the past decade.

United Airlines expects that its adjusted pre-tax income will be positive in Q3 FY 2021, which would be the first quarter of positive adjusted pre-tax income since Q4 FY 2019. Adjusted pre-tax income is also expected to be positive in Q4 FY 2021.