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United AirlinesFourth quarter profit and early 2023 outlook topped Wall Street estimates because of strong travel demand and high prices.
Consumer appetite for air travel and willingness to pay higher fares have helped airlines return to profitability despite higher fuel, labor and other expenses to rebuild their networks. Meanwhile, aircraft delivery delays and training backlogs are limiting airline growth, keeping prices high.
United reported a profit of $843 million for the last three months of 2022, up 31% from three years earlier, with revenues of $12.4 billion. These revenues were almost 14% higher than the identical period in 2019, pre-pandemic, despite flying 9% less, which helped turn a profit despite a 21% increase in unit costs over three years earlier.
United shares were up about 3% in Wednesday’s pre-market trading.
The quarterly update is one other sign of a great end to the yr for airlines, despite severe winter storms and disruptions to the favored holiday season.
A ground crew member directs a United Airlines flight to the gate in Terminal A at Newark Liberty International Airport (EWR) in Newark, Latest Jersey, U.S., Thursday, January 12, 2023.
Aristide Economopoulos | Bloomberg | Getty Images
Last week, Delta AirlinesProfit and revenue exceeded Wall Street expectations, although higher costs, driven partially by an expected pilot contract, weighed on the first-quarter profit forecast. Also last week american airlineswhich reports on January 26, raised its fourth-quarter profit and sales forecast.
Here’s how United fared in fourth quarter in comparison with Wall Street expectations, based on Refinitiv average estimates:
- Adjusted earnings per share: $2.46 versus expected $2.10
- Total income: USD 12.4 billion in comparison with the expected USD 12.2 billion
In response to Refinitiv, in the primary three months of 2023, United expects to generate revenue 50% higher than in the identical period of 2022. It expects first-quarter earnings per share to be between 50 cents and $1, above analysts’ consensus of 25 cents.
United expects to extend flying by 20% in the primary quarter in comparison with last yr, the filing said.
It predicts a dozen-fold increase in capability throughout 2022. It forecasts unit revenue, i.e. revenue per available passenger mile, to be stable throughout the approaching yr in comparison with 2022, which is an indication that the sharp increase in air ticket prices this yr may proceed to say no as airlines add more flights.
United also said in investor presentation staffing issues, aircraft shortages and outdated technology will limit the industry’s capability this yr.
Because the airline industry grapples with a Covid-induced labor shortage, United and others hope to extend the variety of pilots and crews in the following fiscal yr. The corporate on Tuesday noted the debut of the Calibrate apprenticeship program, which it launched in November, and the United Aviate Academy, which began in early 2022. The airline also said on Tuesday it had opened a refurbished and expanded flight attendant training center in Houston.
United has yet to succeed in a latest employment contract with its pilots. Delta and its pilots’ union have reached a tentative agreement on the large increases, but pilots have yet to vote on it.
CEO Scott Kirby told CNBC’s Fast Money that the airline’s pilots’ union is working to elect a latest leader after the resignation of the last boss, which ought to be finalized later this month. With a latest leader elected, Kirby expects negotiations to resume on February 7.
He said the agreement on the pilot deal “ought to be done fairly quickly after we get back to the table”.
United said in its investor presentation that it expects latest deals with pilots, stewards, technicians and airport staff to maintain non-fuel costs stable in 2022.
Kirby also said the industry’s supply constraints reflect a broader infrastructure problem, seen within the recent failure of the Federal Aviation Administration’s system. He said the FAA’s expansion into space and drones strained resources it could normally use to support aviation infrastructure.
“That they had to rob Peter to pay Paul,” Kirby said. “They only haven’t got enough resources.”
Kirby said he was in Washington twice a month lobbying for more funding.
United management will hold a telephone call with analysts and the media at 10.30am EST on Wednesday.