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United Airlines Holdings Inc. today it changed to +2%. The stock has gained 22% over the past three months. Earlier this week, the company reported earnings results for the fourth quarter of 2022 where revenue and earnings exceeded forecasts. Here’s a look at our near-term expectations:
Revenue and profit
For the fourth quarter of 2022, United Airlines generated operating income of $12.4 billion, which is an increase of 53% year-on-year and 14% compared to the fourth quarter of 2019. Passenger revenue increased by almost 13% and cargo revenue increased by 49% compared to Q4 2019.
Total revenue per available seat mile (TRASM) was up 25.8% compared to Q4 2019, while passenger revenue per available seat mile (PRASM) was up 24.6%. Although TRASM continued to outpace PRASM in Q4, the company expects this trend to reverse in 2023. During the fourth quarter, PRASM remained strong across all network segments. United expects TRASM to remain flat in 2023 compared to 2022. For the first quarter of 2023, TRASM is expected to rise about 25% YoY.
For the fourth quarter of 2022, United posted adjusted EPS of $2.46. This compares to a loss of $1.60 per share reported in the prior-year period. Adjusted EPS is down almost 8% from Q4 2019. For the first quarter of 2023, adjusted EPS will be $0.50-1.00. For FY2023, adjusted EPS is estimated to be between $10-12.
Demand and capacity
United sees healthy demand. International demand is particularly strong and the company believes there is an opportunity to generate significant revenue and profit in its global network. In the fourth quarter of 2022, the capacity was 9.5% lower than Q4 2019. For the first quarter of 2023, the capacity is expected to rise by 20% compared to the first quarter of 2022. For the full year of 2023, the capacity is expected to rise in the high teens compared to 2022.
cost
In Q4 2022, the cost per available seat mile, excluding fuel (CASM-ex) decreased by 2% YoY but up 11.2% from Q4 2019. For the first quarter of 2023, CASM-ex is expected to decrease by 3-4% versus Q1 2022 .For FY2023, CASM-ex is expected to be flat with 2022.
Click here to read the full transcript of United Airlines’ Q4 2022 earnings conference call
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