United Airlines (UAL) Falls Despite Q4 Earnings & Revenues Beat


United Airlines UAL incurred a loss (excluding 39 cents from non-recurring items) of $1.60 per share in the fourth quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.23. Operating revenues of $8,192 million also outperformed the Zacks Consensus Estimate of $7,930.9 million. Both the top and bottom lines improved significantly year over year, thanks to strong holiday travel demand.

Despite this strong fourth-quarter performance, shares of the company declined 1.9% in after-market trading on Jan 19. UAL’s expectations of lower capacity and increased non-fuel unit costs (adjusted) in 2022 might have weighed on investors’ sentiments.  

With the Omicron variant of coronavirus hurting near-term demand, United Airlines expects 2022 capacity to decline compared with the 2019 level. Previously, the airline expected the same to increase 5% from the 2019 level. The company now forecasts 2022 adjusted CASM, excluding fuel, to increase from the 2019 level. Previously, the company anticipated the same to decline from the 2019 level.

United Airlines Holdings Inc Price, Consensus and EPS Surprise

United Airlines Holdings Inc Price, Consensus and EPS Surprise


United Airlines Holdings Inc price-consensus-eps-surprise-chart | United Airlines Holdings Inc Quote

Coming back to United Airlines’ quarterly results, the amount of loss incurred in the fourth quarter narrowed by 77.1% year over year. This is the eighth consecutive quarterly loss incurred by the company as coronavirus concerns continue to weigh on air-travel demand.

The top line surged more than 100% year over year, with passenger revenues, accounting for 84% of the top line, soaring 185.4% to $6,878 million. This reflects the improvement in air-travel demand from the pandemic-induced lows in 2020. The company said that its bookings for spring and summer travel demand remain strong.

Nevertheless, with air-travel demand continuing to be below the pre-pandemic levels, total revenues declined 24.8% from the fourth quarter of 2019 (pre-pandemic). Passenger revenues dropped 30.87% from the 2019 level, while cargo revenues jumped more than 100% to $727 million. Revenues from other sources decreased 8.1% from the fourth quarter of 2019 to $587 million.

Operating Results

Below we present all comparisons (in % terms) with fourth-quarter 2019.

Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 10.2% from the 2019 level to 12.55 cents. Total revenue per available seat mile (TRASM) dipped 2.5% to 14.94 cents. On a consolidated basis, average yield per revenue passenger mile fell 3.8% to 16.30 cents.

Consolidated airline traffic, measured in revenue passenger miles, fell 28.1%, while capacity, measured in available seat miles, decreased 22.8%. Consolidated load factor (percentage of seat occupancy) deteriorated to 77% from 82.5% in the fourth quarter of 2019 as traffic declined more than the drop in capacity. Average aircraft fuel price per gallon increased 14.8% to $2.41. Fuel gallons consumed were down 24%.

Adjusted operating expenses fell 12.4% to $6,552 million. Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, third-party business expenses, profit-sharing and special charges, ascended 13.5%.

United Airlines exited the fourth quarter with cash and cash equivalents of $18,283 million compared with $11,269 million at the end of 2020. Long-term debt at the end of the reported quarter was $30,361 million compared with $24,836 million at the end of December 2020. This Zacks Rank #4 (Sell) company exited the quarter with total available liquidity of $20 billion.

Outlook

United Airlines expects first-quarter 2022 capacity to decline 16-18% from the first quarter of 2019. The company estimates total operating revenues to drop 20-25% in the current quarter from the comparable period in 2019. Adjusted CASM, excluding fuel, is predicted to increase 14-15% in the first quarter from the 2019 level. Fuel price per gallon is estimated to be approximately $2.51 per gallon in the ongoing quarter.

United Airlines plans to unground its 52 Pratt & Whitney-powered Boeing 777 jets in 2022. The planes were grounded last year after a United Airlines flight made an emergency landing at Denver International Airport due to an engine failure.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL and J.B. Hunt Transport Services JBHT recently reported fourth-quarter 2021 results.

Delta, carrying a Zacks Rank #4, reported fourth-quarter 2021 earnings (excluding 86 cents from non-recurring items) of 22 cents per share, which outpaced the Zacks Consensus Estimate of 15 cents. Results came against the year-ago quarter’s loss of $2.53 per share. Strong holiday travel demand and favorable pricing aided the December quarter’s results.

Delta’s revenues came in at $9,470 million, which not only beat the Zacks Consensus Estimate of $9,232.1 million but also soared in excess of 100% from the year-ago figure as people resorted to air travel during the holidays.

J.B. Hunt Transport Services, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 earnings of $2.28 per share, surpassing the Zacks Consensus Estimate of $1.99. The bottom line surged 58.3% year over year on the back of higher revenues across all segments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

J.B. Hunt’s operating revenues of $3,497 million also outperformed the Zacks Consensus Estimate of $3,287.8 million. The top line jumped 27.7% year over year. Total operating revenues, excluding fuel surcharges, rose 21.7% year over year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




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