United Airlines (UAL) likely to deliver mixed results for Q4 2023

United Airlines Holdings, Inc. (NYSE: UAL) continued its return to profitability in 2023 after ending the pandemic-driven losing streak a year earlier. The aviation firm is all set to publish fourth-quarter earnings on January 22, after markets close.

United’s stock is yet to recover meaningfully from the COVID-induced selloff it suffered in early 2020. Though UAL regained some strength after slipping to multi-year lows, it failed to maintain the momentum. Meanwhile, the stock entered the new year on a positive note, but soon changed course and slipped below the long-term average ahead of the earnings.

Q4 Report on Tap

The fourth-quarter report is slated for release on January 22 at 4:05 p.m. ET, amid expectations for a mixed outcome. On average, analysts forecast a 9.20% increase in Q4 revenues to $13.54 billion. The consensus earnings estimate for the December quarter is $1.70 per share, vs. $2.46 per share in the comparable period of 2022.

Recently, operations were disrupted after United discontinued flights to the Middle East due to the Israel-Palestine conflict, though it diverted some flights to other sectors like Athens to ease the impact. Last year, flights were canceled due to bad weather and FAA staffing issues also. However, the company’s broad network and popular loyalty programs help in driving passenger traffic. An efficient management team, after a major shakeup, also bodes well for the business.

From United’s Q3 2023 earnings call:

“Even in a tough industry environment, we’re producing strong absolute results while producing the best relative results in our history. We believe we have a lot of runway ahead of us with United Next and our diverse revenue streams, along with our ability to catch up on gauge and connectivity, positioning United well. We expect that the current stress in certain segments of the industry is also going to lead to structural changes that lay the foundation for an even better future for United, our employees, our customers, and our shareholders,”

Key Numbers

In the third quarter, the bottom line beat estimates for the sixth time in a row. At $3.65 per share, adjusted profit was up 30% year-over-year during the three months. The impressive earnings growth was driven by a 13% growth in revenues to $14.5 billion, which almost matched analysts’ forecast. Cargo revenues shrunk by a third from last year, as the covid-era spike in parcel deliveries diminished, which was more than offset by a double-digit increase in passenger revenues.

United shares ended the last trading session lower and stayed slightly below $40. They are down 6% since the beginning of 2024.