United Airlines reported fourth-quarter profit and revenue higher than Wall Street expectations and gave a bullish 2023 forecast that assumes people will keep traveling despite inflation and concern about the economy.After the stock market closed Tuesday, United said it earned USD 843 million in the quarter.
The Chicago-based airline said that it is seeing strong demand for flights extending into into the new year, which will help the company cover expected increases in labor costs as it negotiates new union contracts.
United predicted that its first-quarter earnings per share will easily top analysts’ expectations. Its stock rose modestly, less than 2 per cent, in after-market trading.
The report from United comes on the heels of upbeat comments by its closest rivals, Delta Air Lines and American Airlines.
Officials with all three carriers say that consumers are still booking travel despite concern about the economy – tech companies in particular have been laying off workers – and high inflation.
Airline tickets are contributing to inflation. In December, they cost 28.5 per cent more than a year earlier, according to government figures. United passengers paid on average 25.5 per cent more per mile than a year ago, and 20.8 per cent more than in late 2019.
Those higher fares are due to strong demand and a limited number of flights as airlines continue to rebuild operations that were slashed after the pandemic devastated air travel.
United said in a regulatory filing that the number of flights this year will be held down by a pilot shortage, the need to keep bigger staffs as a cushion against Covid-10 sick calls, delays in getting new planes, and technology limits.
Most major airlines say they are fully staffed now, although they are catching up on training thousands of new workers, including pilots.
United said its fourth-quarter profit worked out to USD 2.46 per share after excluding certain items. That beat Wall Street’s mean forecast of USD 2.11 per share in adjusted profit, according to a survey by FactSet. Revenue was USD 12.4 billion.
For the first quarter, United is projecting profit of 50 cents to USD 1 per share, which would exceed the analysts’ forecast of 31 cents per share. United said it will earn USD 10 to USD 12 per share for all of 2023, which would handily beat Wall Street’s expectation of USD 6.84.
Company officials were scheduled to hold a call with analysts on Wednesday.
Delta reported last week that it made USD 828 million in the fourth quarter, but it gave a disappointing outlook for first-quarter profit because, it said, it included the potential cost of a new contract with pilots that – if ratified in the weeks ahead – would be retroactive to January 1.
Also last week, American Airlines raised expectations for results that it will post on January 26.