United Airlines (UAL) Q4 2022 earnings

UAL CEO speaks after company's top and bottom results beat

United Airlines“Fourth quarter profit and outlook for early 2023 beat Wall Street estimates on strong travel demand and high fares.

Consumer appetite for air travel and willingness to pay higher fares has helped airlines return to profitability despite higher fuel, labor and other expenses linked to recovering their networks. Meanwhile, aircraft delivery delays and training delays have restricted airline growth, keeping fares high.

United reported a profit of $843 million in the last three months of 2022, a 31% increase compared to three years earlier, on revenue of $12.4 billion. That revenue was nearly 14% higher than in the same period in 2019, before the pandemic, despite flying 9% lower, which helped drive profits despite a 21% increase in unit costs over three years before.

United shares gained about 2% in extended trading on Tuesday.

The quarterly update is another sign of a strong end to the year for airlines, despite heavy winter storms and disruptions during the popular holiday travel period.

A ground crew member guides a United Airlines plane to a gate at Terminal A at Newark Liberty International Airport (EWR) in Newark, New Jersey, US, on Thursday, January 3. 12, 2023.

Aristide Economopoulos Bloomberg | Getty Images

Last week, Delta Air Lines“Earnings and revenue beat Wall Street expectations, although higher costs, in part due to an expected pilot labor deal, weighed on its first-quarter profit forecast. Also last week , American Airlines, which reports in January. 26, raised its profit and sales forecast for the fourth quarter.

Here’s United’s fourth-quarter performance compared to what Wall Street expected, according to average estimates compiled by Refinitiv:

  • Adjusted earnings per share: $2.46 vs. $2.10 expected
  • Total revenue: 12.4 billion dollars against the 12.2 billion expected

In the first three months of 2023, United expects to generate revenue 50% higher than the same period in 2022. First-quarter earnings per share are expected to be between 50 cents and $1, above the analyst consensus of 25 cents, according to Refinitiv.

United expects to expand flights by 20% in the first quarter from a year ago, it said in a filing.

It forecast capacity growth in the high teens for the full year through 2022. It forecast that unit revenue, or revenue per available seat mile, for the full year will remain flat compared to 2022, a sign that the steep increase in airfares this year could continue to slow as airlines add more flights again.

United also said in an investor presentation that staffing issues, a shortage of aircraft and outdated technology would constrain the industry’s capacity this year.

As the airline industry grapples with a Covid-induced labor shortage, United and others hope to increase the number of pilots and crew in the coming fiscal year. The company on Tuesday noted the debut of its Calibrate learning program, which it launched in November, and the United Aviate Academy that began in early 2022. The airline also said Tuesday that it opened a renovated facility and expanded flight attendant training in Houston.

United has yet to reach a new labor agreement with its pilots. Delta and its pilot union have reached a preliminary agreement for big hikes, but pilots have not yet voted on it.

CEO Scott Kirby told CNBC’s “Fast Money” that the airline’s pilots union is working to elect a new leader after its last boss resigned, which should be finalized by the end of this month. Once the new leader is selected, Kirby expects negotiations to resume, which he estimated will be in February. 7.

He said an agreement on a pilot contract “has to be done fairly quickly once we get back to the table.”

United said in its filing with investors that it expects new contracts with pilots, flight attendants, technicians and airport employees to keep its non-fuel costs stable through 2022.

Kirby also said the industry’s supply constraints reflect a broader infrastructure problem, shown in the recent Federal Aviation Administration system outage. He said the FAA’s expansion into space and unmanned aircraft has strained resources it would normally use to support flight infrastructure.

“They had to rob Peter to pay Paul,” Kirby said. “They just don’t have enough resources.”

Kirby said he is in Washington, D.C., twice a month lobbying for more resources.

United executives will hold a call with analysts and media at 10:30 a.m. ET on Wednesday.

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