United Airlines Expected to End Year Strong With Climbing Revenue

United is investing in up to 200 new aircraft in a bid to outgrow rivals

A United Airlines airplane flying over water at sunset

Courtesy of United Airlines

Key Takeaways

  • United is expected to report for the fourth quarter adjusted EPS of $2.10 compared with a loss the year before.
  • Revenue is predicted to increase by 49.4% to $12.2 billion as air travel demand has recovered from the pandemic.
  • United's load factor could fall from the previous quarter but is still expected to be up year-over-year and in line with pre-pandemic levels.

United Airlines Holdings Inc. (UAL), among the three largest airlines in the world by revenue, will probably report a third straight profitable quarter in the final three months of 2022, underscoring a surge in air travel demand following the pandemic-related slump.

The carrier's net income likely reached $692.4 million, or adjusted earnings per share (EPS) of $2.10, as revenue climbed by just under 50% to $12.2 billion, according to average analyst estimates compiled by Visible Alpha. United lost $520 million, representing adjusted EPS of -$1.60, in the prior-year quarter. The company's load factor, indicating the percentage of available seats sold, could fall to 83.9% from 87.3% in the previous quarter. United will issue its financial report after markets close on Jan. 17 and hold an investor call early on Jan. 18.

United Airlines Key Stats
  Estimate for Q4 FY 2022 Actual for Q4 FY 2021 Actual for Q4 FY 2020
Adjusted Earnings Per Share ($) 2.10 -1.60 -7.00
Revenue ($B) 12.2 8.2 3.4
Load Factor (%) 83.9 77.0 55.6

United's return to profitability in 2022 reflects industry-wide strength in passenger revenue as customers resumed traveling after periods of lockdown and amid easing COVID-19 restrictions around the globe. Conversely, volatility in jet fuel costs related to Russia's invasion of Ukraine could hurt the bottom line for aviation companies, though a spike in the price of airfare later in the year may offset the added expenses.

United ended 2022 on an upswing despite inflation, a slowing economy, and a nationwide year-end storm which upended travel schedules and led to the cancellation of thousands of flights. The company had fewer flight disruptions in late December than some of its competitors. It also aggressively expanded its fleet at the end of 2022 by ordering up to 200 Boeing 787 Dreamliners, a move that CEO Scott Kirby told employees would make United "the biggest [airline] in the near future."

United shares fell at the end of the year but rallied early in 2023 for an increase of about 17% compared with a roughly 12% drop for the S&P 500 Index over the last 12 months.

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

The Key Metric: Load Factor

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.

United's load factor percentage returned to the mid-80s in the second quarter of last year, matching its pre-pandemic level. An expected figure of 83.9% for the fourth quarter is lower than the previous two quarters but well above 77.0% from the prior-year period.

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