A member of the ground crew directs a United Airlines aircraft to a gate at Terminal A of Newark Liberty International Airport (EWR) in Newark, New Jersey, on Thursday, January 12, 2023.
Aristide Economopoulos | Bloomberg | Getty Images
United Airlines’ fourth-quarter earnings and outlook for early 2023 beat Wall Street estimates thanks to strong travel demand and high airfares.
Consumers’ appetite for air travel and willingness to pay higher fares has helped airlines return to profitability despite higher fuel, labor and other costs associated with expanding their networks. Meanwhile, delays in aircraft deliveries and training backlogs have stunted airline growth and kept airfares high.
United reported earnings of $843 million for the last three months of 2022, up 31% from three years earlier, on revenue of $12.4 billion. That revenue was nearly 14% higher than the same period in pre-pandemic 2019, while flying 9% less, which helped it turn a profit despite a 21% increase in unit costs over three years.
Here’s how the airline performed in the fourth quarter compared to Wall Street expectations, based on average estimates compiled by Refinitiv:
- Adjusted earnings per share: $2.46 vs. $2.10 expected
- Total sales: $12.4 billion versus $12.2 billion expected
For the first three months of 2023, United expects revenue to be 50% higher than the same period in 2022. According to Refinitiv, earnings per share for the first quarter will be between 50 cents and $1, ahead of the analyst consensus of 25 cents lie.
United shares were up about 3% in extended trading on Tuesday.
The quarterly update is another sign of a strong end to the year for airlines, despite severe winter storms and disruption during the popular holiday travel season.
Last week, Delta Air Lines’ earnings and revenue beat Wall Street expectations, although higher costs, partly due to an expected pilot labor deal, weighed on its first-quarter earnings forecast. Also last week, American Airlines, reporting Jan. 26, raised its earnings and revenue guidance for the fourth quarter.
United expects to increase flying by 20% year over year in the first quarter, a filing said.
It forecast capacity growth in the high teens for the full year through 2022. It forecasts unit revenue, or revenue per available seat mile, for the full year to be flat compared to 2022, a sign that fares could rise sharply this year and are going further back as airlines add more flights.
United also said in an investor presentation that staffing issues, aircraft shortages and outdated technology would limit the industry’s capacity this year.
As the airline industry faces a labor shortage caused by Covid, United and others are hoping to increase pilot and crew numbers in the next fiscal year. The company on Tuesday announced the debut of its Calibrate training program, launched in November, and United Aviate Academy, launched in early 2022. The airline also announced Tuesday that it has opened a renovated and expanded flight attendant training facility in Houston.
United executives will host a conference call with analysts and the media Wednesday at 10:30 a.m. ET.
– CNBC’s Rebecca Picciotto contributed to this report.
This story evolves. Please check again for updates.