tiprankstipranks
Market News

United Airlines’ Q2 Results Fail to Excite; Shares Drop 7%

Story Highlights

United Airlines’ performance has improved from the previous year, reflecting demand revival. However, it remains lower than the pre-pandemic levels.

Airline major United Airlines, Inc. (NASDAQ: UAL) reported disappointing results for the second quarter ended June 30, 2022. The muted results were on the back of both revenue and earnings failing to surpass expectations.

Following the weak results, shares of the company declined by a whopping 7.2% to close at $38.70 in yesterday’s extended trade.

Revenue & Earnings Rise, But Not as Expected

United Airlines reported total operating revenues of $12.11 billion for the second quarter. This denotes a growth of 121.4% and 6.2% from the levels of 2021 and 2019, respectively. Yet, the figure failed to surpass the consensus estimate of $12.16 billion.

The company reported earnings per share (EPS) of $1.43 for the quarter. This compares favorably to a loss of $3.91 per share reported in the previous year. Yet, it is lower than the EPS of $4.21 reported in 2019. Moreover, the figure woefully missed the consensus estimate of an EPS of $1.85.

Let’s Pore Over Some of the Key Operating Metrics

United Airlines reported an operating income of $878 million, which compares favorably to an operating loss of $270 million in the prior year. However, it is much lower than the projected operating income of $1.47 billion in 2019.

The company’s passenger revenue per available seat mile for the quarter came in at 17.30 cents, up 57% and 20.8% from 2021 and 2019, respectively.

Meanwhile, the average yield per revenue passenger mile increased by 30.2% and 19.8% from 2021 and 2019, respectively, to 19.94 cents.

Management’s Commentary

CEO of United Airlines, Scott Kirby said, “It’s nice to return to profitability – but we must confront three risks that could grow over the next 6-18 months. Industry-wide operational challenges that limit the system’s capacity, record fuel prices and the increasing possibility of a global recession are each real challenges that we are already addressing. These fundamental challenges have already led to higher costs, higher fuel prices but, also higher revenue, which means we’re as confident as ever we will deliver on our 9 percent adjusted pre-tax margin target in 2023.”

Wall Street’s Take

Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on nine Buys, seven Holds, and two Sells. The UAL average price target of $56.16 implies the stock has upside potential of 34.7% from current levels. Shares have declined 13.4% over the past year.

TipRanks Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into United Airlines’ performance this quarter.

According to the tool, the United Airlines website recorded a 33.34% monthly rise in global visits in June, compared to last year. Moreover, year-to-date, United Airlines website traffic increased by 24.80%, compared to the previous year. Learn how Website Traffic can help you research your favorite stocks.

United Airlines’ burgeoning website traffic is an indicator of the company’s airlines finally getting traction among passengers who are opting to finally travel after a lull due to the pandemic.

Key Takeaways

United Airlines’ second quarter results have been impressive compared to the last year, with all key metrics witnessing growth. However, profitability has still not reached 2019 levels. Moreover, high fuel prices and an impending recession make that path tougher.

Read full Disclosure

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More