United Airlines Q3 2021 Earnings Report Recap

UAL beat on earnings and revenues, missed on load factor

Key Takeaways

  • United Airlines' load factor came in below analyst predictions, although it reached the highest level since Q4 FY 2019.
  • Load factor measures the percentage of an airline's seating capacity that is filled with paying passengers.
  • The fast-spreading delta variant could slow recovery in travel demand.
United Airlines Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat -$1.02 -$1.69
Revenue Beat $7.8B $7.7B
Load Factor Miss 76.1% 78.7%

Source: Predictions based on analysts’ consensus from Visible Alpha

United Airlines (UAL) Financial Results: Analysis

United Airlines Holdings, Inc. (UAL) reported Q3 FY 2021 financial results that beat analyst predictions on adjusted earnings per share (EPS) and revenue. Adjusted EPS came in at -$1.02, significantly narrower than analyst predictions and the -$8.16 that the airline posted in Q3 FY 2020. Revenue came in slightly ahead of analyst expectations and was more than triple that of the prior-year quarter, with United reporting Q3 FY 2021 revenue of $7.8 billion.

United Load Factor

United's load factor improved by 59.2% year over year, as the company reported load factor of 76.1%. Despite this improvement, load factor still fell short of predictions and remains solidly below pre-pandemic levels. Analysts had expected a load factor of 78.7% for the quarter.

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.

United Guidance and Stock Performance

United stated that the company remains "confidently on track to achieve the range of longer term financial targets" it provided in the summer of 2021. The company cited a rebound in premium leisure travel, recovery of business travel, reopening of European borders in November, and loosening travel restrictions elsewhere in the world as factors supporting its recovery. The company plans to increase international capacity by 10% in 2022, while domestic capacity remains flat relative to 2019. Generally, United expects Q4 FY 2021 capacity to be down roughly 23% and total revenue to be down 25% to 30% compared to Q4 FY 2019.

United shares were up approximately 1.5% in pre-market trading following the earnings release. The company has provided one-year trailing total returns of 30.2%, slightly below 31.9% for the S&P 500.

United's next earnings report (for Q4 FY 2021) is estimated to be released on Jan. 18, 2022.

Article Sources

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