‘it’s betting on its future’

United Airlines Holdings Inc (NASDAQ: UAL), on Tuesday, reported market-beating results for its fiscal fourth quarter. The stock gained 3.0% in extended hours.

Peter McNally reacts to the earnings print

Shareholders also cheered the forecast that revenue in the first quarter of 2023 will be up 50% on a year-over-year basis, thanks to solid demand despite higher prices.

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United Airlines guided for $8.5 billion of capital expenditures this year versus $8.25 billion expected. Reacting to it on Yahoo Finance Live, Third Bridge’s Peter McNally said:

If you believe that this market will exceed prior high, United is most aggressively betting on that as you see it in their aircraft orders. They’ve got the balance sheet to do it. United is betting on its future for sure.

Last month, United Airlines said it will buy 100 787 Dreamliners from Boeing – the largest order for wide-body aircraft in the U.S. history (find out more).

United Airlines’ guidance for the full year

For the full financial year, United Airlines is calling for $10 to $12 of per-share earnings, including 50 cents to a dollar it expects in the current quarter, as per the earnings press release.

In comparison, analysts were at $6.84 and 31 cents, respectively. McNally added:

We understood that demand has been very strong for air travel. But what jumped out was the guidance. Back in 2019, United Airlines made a little north of $12 a share. So, they’re almost back in terms of profitability on a per-share basis.

United Airlines stock has gained nearly 40% since the start of 2023.

United Airlines Q4 financial highlights

• Swung to a net income of $843 million or $2.55 per share
• That compared to $646 million loss a year ago ($1.99 a share)
• Adjusted for non-recurring items, EPS printed at $2.46
• Revenue of $12.4 billion was up 51% versus pre-pandemic
• Consensus was $2.11 adjusted EPS on $12.23 billion revenue

Operating margin was up 14% this quarter while revenue per seat mile came in 26% higher than the 2019 equivalent. Wall Street currently has a consensus “overweight” rating on this airline stock.