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United Airlines Q3 FY2022 Earnings Report Preview: What to Look For

Focus on UAL load factor

Key Takeaways

  • Analysts estimate adjusted EPS of $2.29 vs. -$1.02 in Q3 FY 2021.
  • Load factor is expected to rise YOY to its second-highest quarterly level in more than six years as the company recovers from the pandemic.
  • Revenue is expected to rise to its highest quarterly level in about six years.

United Airlines Holdings Inc. (UAL), among the world's top three airlines by revenue, will probably report its second straight profitable quarter as revenue rises to a six-year high, fueled by a rebound in air travel.

United is likely to report after markets close on Oct. 18 earnings per share (EPS) excluding certain items of $2.29 for the third quarter, the highest in more than two years, as its load factor jumps to the highest since about 2016, according to an average estimate from Visible Alpha. The company holds a conference call for analysts early on Oct. 19.

The airline industry is cementing its rebound as governments ease COVID-19 restrictions, bolstering leisure and business travel. Still, accelerating inflation, supply chain issues, soaring ticket prices, and a slowing economy present headwinds. Delta Air Lines Inc. (DAL), the first major air carrier to report, released results on Oct. 13 that slightly missed estimates on profit, revenue, and load factor even as the company's results showed strong growth.

United's shares fell after it reported second-quarter earnings in July, erasing an advance that began earlier that month. United shares are down 26.6% in the past year, compared with a 19.3% drop in the S&P 500 Index.

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

United Airlines Earnings History

United posted more than $12 billion of net operating losses in 2020 and 2021, a period when it lost money in every quarter. After losing $9.31 per adjusted share in the second quarter of 2020, the losses generally narrowed in the following seven periods through the first quarter of this year.

The airline's revenue dropped for five straight quarters during the pandemic before rebounding early last year.

United Airlines Key Stats
  Estimate for Q3 FY 2022 Q3 FY 2021 Q3 FY 2020
Adjusted Earnings Per Share ($) 2.29 -1.02 -8.16
Revenue ($B) 12.7 7.8 2.5
Load Factor (%) 86.2 76.1 47.8

Source: Visible Alpha

The Key Metric

Load factors are key metrics because the cost of sending an aircraft into flight is relatively the same whether 50 or 100 paying passengers are aboard. That gives airlines an incentive to fill as many seats as possible. Higher load factors mean an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable.

For FY 2018 and 2019, United's quarterly load factor ranged from 80.4% to 86.1%. It dropped to 70.9% in Q1 FY 2020 and plunged to 33.1% in Q2 FY 2020 before reaching 86.7% in this year's second quarter. United's load factor will probably increase to 86.2% in the third quarter, the second-highest load factor in about six years.

Article Sources
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  1. Business Insider. "Most airlines are now much smaller than they were before the pandemic. See the 20 biggest airlines in the world ranked by available seats."

  2. Visible Alpha. "Financial Data."

  3. United Airlines. "United to Hold Webcast of Third-Quarter 2022 Financial Results."

  4. International Air Transport Association. "Travel Recovery Rebuilding Airline Profitability - Resilient Industry Cuts Losses to $9.7 billion."

  5. CNBC. "High inflation has many Americans tweaking their holiday travel plans."

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