United Airlines May Say Loss Narrowed in 1Q from a Year Ago

Higher fuel, labor costs probably offset jump in revenue

A United Airlines Airbus passenger jet
United Airlines Airbus passenger jet.

 Getty Images/Robert Alexander

United Airlines (UAL), America's third-largest airline by revenue, will probably say its first-quarter loss narrowed from a year ago as higher fuel and labor costs offset a jump in ticket revenue.

The airline is likely to post a loss of $241 million, or 73 cents a share, ending three straight profitable quarters, compared with a $1.2 billion loss a year earlier, according to analyst estimates compiled by Visible Alpha. Passenger revenue probably rose 61% to $10.2 billion, more than compensating for a 28% drop in its cargo business. United will report earnings after markets close on Tuesday, April 18.

Key Takeaways

  • United Airlines is expected to post a loss of $240 million for the first quarter of 2023.
  • The airline's stock has been dropping since it lowered earnings estimates in March.
  • First-quarter revenue is expected to be the best on record.

United's results could highlight both the resilience of the post-Covid travel rebound and the burden of persistently elevated fuel and labor costs. United's salary costs in the first quarter are expected to be 27% higher than a year ago. In a March regulatory filing, the company raised its estimated fuel costs to a range of $3.31 to $3.41 per gallon from $3.19.

In the same filing, it also lowered its estimates for growth of total revenue per available seat mile, or TRASM, to a range of 22%-23% from 25%.

“While all months of 2023 are expected to produce unit revenue significantly above the corresponding months in 2019, the company is observing new seasonal demand patterns, with lower-demand months such as January and February 2023 growing less than higher-demand months,” the company wrote in the SEC filing. 

United's largest competitor, Delta Air Lines, fell short of its first-quarter earnings projections last week, when it also reported a net loss that management partially attributed to a four-year pilot contract that included an initial 18% pay increase. Nonetheless, the company projected travel demand would be strong throughout the summer. 

United's stock has tumbled since it announced its profit warnings in March. Even so, the shares are up over 10.5% year-to-date, more than the S&P 500 (up 8.3%) and the benchmark S&P Transportation Select Industry Index (up 7.1%). 

United Airlines stock chart.

Key Metric: Load Factor

Analysts who follow airlines pay close attention to their load factors, which shows the percentage of available seats that are filled. Since airlines have fixed costs on each flight, profit margins for these businesses are typically thin, making it essential for airlines to maintain a relatively high load factor.

United's load factor likely increased to 80.5% in the first quarter from 72.6% in the same period a year ago. That would be United’s highest first-quarter load factor since 2019, when it was 80.7%. After the pandemic decimated airlines’ load factor, United’s rebounded in the 2022 third quarter to 87.3%, its highest in years. 

United Airlines Key Metrics
   Estimate for Q1 2023  Q1 2022  Q1 2021
Earnings per share ($)  -0.73  -4.24  -4.29
Revenue ($B)  11.4  7.6  3.2
Load Factor (%) 80.5 72.6 56.8
Source: Visible Alpha
Article Sources
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  1. Securities and Exchange Commission. "FORM 8-K United Airlines Holdings March 13, 2023."

  2. Delta Air Lines. "Delta Air Lines Announces March Quarter 2023 Financial Results."

  3. FRED. “Load Factor for U.S. Air Carrier Domestic and International, Scheduled Passenger Flights.”

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