A ground crew member directs a United Airlines airplane to the gate at Terminal A of Newark Liberty International Airport (EWR) on Thursday, Jan. 12, 2023 in Newark, New Jersey, US.
Aristide Iconopoulos | Bloomberg | Getty Images
United AirlinesFourth-quarter profit and the outlook for early 2023 topped Wall Street estimates thanks to strong travel demand and higher fares.
Consumers’ appetite for air travel and willingness to pay higher fares have helped airlines to return to profitability despite higher costs for fuel, labor and other expenses to keep their networks afloat. Meanwhile, aircraft delivery delays and training backlogs have hampered the airline’s growth, keeping high rent,
Related Investment News
United reported a profit of $843 million for the final three months of 2022, a 31% increase from three years ago on revenue of $12.4 billion. That revenue was nearly 14% higher than the same period in 2019, before the pandemic flew 9% lower, helping it post a profit despite a 21% increase in unit costs three years ago.
Here’s how carriers performed in the fourth quarter compared to what Wall Street expected, based on average estimates compiled by Refinitiv:
- Adjusted Earnings Per Share: $2.46 vs expected $2.10
- total revenue: $12.4 billion versus the expected $12.2 billion
For the first three months of 2023, United is expected to generate 50% more revenue than the same period in 2022. First-quarter earnings per share are expected to be between 50 cents and $1, according to Refinitiv, above the analyst consensus of 25 cents.
United shares rose nearly 3% in extended trading on Tuesday.
The quarterly update is another sign of a strong year end for airlines, despite severe winter storms and disruptions during the popular holiday travel period.
Last week, Delta AirlinesProfit and revenue exceeded Wall Street’s expectations, though higher costs, partly due to an expected pilot labor deal, weighed on its first-quarter profit forecast. Also last week, American AirlinesWhich reports on Jan. 26, increased its profit and sales forecasts for the fourth quarter.
United expects to fly 20% in the first quarter from a year earlier, it said in a filing.
It forecasts capacity addition in the high teens for the full year over 2022. It forecast unit revenue, or revenue per seat mile, for the full year to come in flat compared to 2022, a sign that airfares could see a sharp increase this year. The shortage continues as airlines add back more flights.
United also said in a investor presentation Staffing problems, aircraft shortages and outdated technology will limit the industry’s capacity this year.
As the airline industry faces a Covid-induced labor shortage, United and others are hoping to boost pilot and crew counts in the next fiscal year. The company on Tuesday noted the launch of its Calibrate apprenticeship program, which it launched in November, and the United Aviate Academy, which is set to begin in early 2022. The airline also said Tuesday that it has opened a renovated and expanded flight attendant training facility in Houston.
United has not yet reached a new labor agreement with its pilots. Delta and its pilots’ union have reached a preliminary agreement for a major raise, but the pilots have yet to vote on it.
United executives will speak with analysts and the media at 10:30 a.m. ET Wednesday.
—CNBC’s Rebecca Picciotto contributed to this report.
This story is developing. Please check back for updates.