What to expect when United Airlines (UAL) reports Q1 2023 earnings next week

Shares of United Airlines Holdings Inc. (NASDAQ: UAL) were down 5% on Wednesday. The stock has gained 10% year-to-date. The company is scheduled to report its first quarter 2023 earnings results on Tuesday, April 18, after market close. Here’s a look at what to expect from the earnings report:

Revenue

United expects its total operating revenue for the first quarter of 2023 to be up approx. 51% from the same period a year ago. Analysts are projecting revenue of $11.4 billion for UAL in Q1 2023, which represents a 51% increase year-over-year. In the fourth quarter of 2022, total operating revenue was $12.4 billion, up 51% year-over-year and up 14% from Q4 2019.

Earnings

United expects to report an adjusted loss per share of $0.60-1.00 in Q1 2023 versus its previous outlook for adjusted EPS of $0.50-1.00. Analysts are predicting a loss of $0.66 per share in Q1 2023. This compares to an adjusted loss of $4.24 per share reported in the year-ago quarter. In Q4 2022, United reported adjusted EPS of $2.46.

Points to note

United is seeing a strong demand environment which allowed it to raise its revenue expectation for the first quarter of 2023. The company had earlier anticipated an increase of approx. 50% in revenue YoY. Higher capacity is contributing to the airline’s top line performance and due to better completion rates, United now expects its capacity for Q1 2023 to be up around 23% from Q1 2022. This compares to the previous expectation of a 20% increase in capacity.

In an update provided last month, United said it has been seeing new seasonal demand patterns, with lower-demand months like January and February seeing less growth compared to higher-demand months. Due to this seasonality shift and the higher completion factor, the company now expects total revenue per available seat mile (TRASM) to increase 22-23% in Q1 2023 compared to the year-ago period. It had earlier guided for an increase of around 25%.

United is expected to incur an expense in Q1 2023, which is related to a new collective bargaining agreement with employees represented by the Air Line Pilots Association. Taking this into account, the company expects cost per available seat mile, excluding fuel (CASM-ex), to be flat to up 1% YoY. Average fuel price per gallon is now expected to range between $3.31-3.41 in Q1, versus the previous outlook of $3.19.