Airline Stocks United, American Airlines Expected To See Profits Soar 100% In Q2

Airline stocks United Airlines (UAL) and American Airlines (AAL) report second-quarter financials this week, with analysts expecting booming profits for both air carriers. The reports follow Delta Air Lines‘ (DAL) recent Q2 earnings beat and full-year profit guidance increase. UAL and AAL were mixed Monday.

Wall Street predicts quarterly earnings up more than 100% for both United and American Airlines. Delta’s financial report on Thursday suggested airline performance was nearing pre-pandemic levels, as air carriers see strong demand for international and domestic air travel.

Delta reported international and domestic sales jumping 61% and 8%, respectively. Delta Chief Executive Ed Bastian declared “consumer demand for air travel remains robust.”

Despite the strong financial performance, Delta shares dropped nearly 3% for the week as investors took profits after the earnings report. That marked the stock’s first decline in nine weeks. Collectively, the 19 stocks in IBD’s Transportation-Airline industry group also slipped for the week — for only the second time in nine weeks.

That could mark an inflection point, or possibly just a pause, in the overall industry rally. As a group, airlines have rallied around 44% in 2023. That’s the 16th best increase among the 197 industries tracked by IBD.

United Airlines stock jumped early before falling a fraction Monday during market trade. American Airlines stock advanced 0.2% and Alaska Air Group dipped 0.4%.

United Airlines Earnings

Estimates: Analysts expect United’s profits to surge 182% to $4.04 per share with sales increasing 15% to $13.9 billion.

Results: Check late Wednesday.

United Airlines stock broke out from a cup-with-handle base in late June. It pulled back, and is hovering just below the buy point of 54.05, according to MarketSmith.

Last week, analysts at Argus and Jefferies both raised price targets on United Airlines stock. The firms upped its price target to 65 and 60, respectively. That’s around 18% above where UAL traded Monday.

Analysts expect demand for air travel to continue to recover from the pandemic, with strong growth in both business and international travel.

Like many air carriers, United had a run of losses during the Covid pandemic. However, that trend has changed in recent quarters. United Airlines has seen sales grow over the past seven quarters, but profits have been mixed.

First-quarter revenue totaled $11.43 billion, rising 51% from last year. Meanwhile, a loss of 63 cents per share improved from a loss of $4.24 in Q1 2022.

The Chicago-based air carrier generated a record $3 billion in operating cash flow during the quarter. The airline also saw the lowest seat cancellation rate for the first quarter since 2012.

United closed out 2022 with Q4 revenue and earnings both jumping more than expected by analysts. Earnings of $2.46 per share topped analysts’ $2.10 target. Revenue came in at $12.4 billion, vs. the $12.23 estimate.

United Airlines stock has a best-possible Composite Rating of 99. The airlines stock has an 89 Relative Strength Rating, an exclusive IBD Stock Checkup gauging share-price movement. UAL has an EPS Rating of 72.

Airline Stocks: American Airlines Earnings

Estimates: Wall Street forecasts AAL EPS ballooning 108% to $1.58 and revenue growing 2% to $13.73 billion.

Results: Check Thursday before the market opens.

On a daily chart, AAL also broke out from a cup-with-handle base in late June. Shares are up not quite 9% from the 16.72 entry.

American Airlines ranks seventh among the airline stocks in the Transportation-Airline industry group. AAL stock has a Composite Rating of 96. It has an 89 Relative Strength Rating. American Airlines stock has an EPS Rating of 80.

On April 20, the air carrier narrowly topped Q1 earnings estimates, with EPS of 5 cents, up from a loss of $2.32 a year ago. American Airlines missed on revenue views, with sales increasing 37% to $12.19 billion.

During the Covid pandemic, AAL had a string of nine quarterly losses before posting a profit in Q2 2022.

On Thursday, Barclays analyst Brandon Oglenski raised the firm’s price target on the airlines stock to 18, up from 15. Oglenski kept an underweight rating on the shares. However, he wrote that U.S. travel demand remains robust this summer, despite prior market fears to the contrary.

The analyst added AAL’s Q2 results will likely reflect solid yields and lower jet fuel prices, “suggesting strong results across the sector.”

Please follow Kit Norton on Twitter @KitNorton for more coverage.

United Airlines Earnings

Airline Stocks: American Airlines Earnings

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