United Airlines Holdings Inc (UAL) Q3 2024 Earnings Call Highlights: Strong EPS and Share ...
Revenue: $14.8 billion, up 2.5% year over year.
Pretax Margin: 9.7% for the third quarter.
Earnings Per Share (EPS): $3.33, above the high end of guidance range.
Consolidated PRASM: Down 1.6% year over year.
Domestic PRASM: Slightly positive in August and September year-over-year.
CASM ex: Up 6.5% on 4.1% capacity growth versus the third quarter of last year.
Share Repurchase Program: $1.5 billion approved by the Board of Directors.
Net Leverage: Current net leverage is 2.7 times, targeting below 2 times in the next few years.
Capital Expenditures: Expected to be less than $6.5 billion for the full year.
Corporate Revenue: Contracted corporate revenues up 13% in September, at 95% of 2019 revenues.
MileagePlus Revenue: Up 11% year over year.
Premium Cabin RASM: Up 2% in Q3.
Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
United Airlines Holdings Inc (NASDAQ:UAL) reported a solid third quarter with a pretax margin of 9.7% and earnings per share of $3.33, exceeding the high end of their guidance range.
The company has approved a $1.5 billion share repurchase program, indicating strong confidence in its financial position and future prospects.
United Airlines Holdings Inc (NASDAQ:UAL) achieved record passenger numbers during the third quarter, including the highest number of customers carried in a single day at 552,000 in July.
The company has made significant investments in technology and customer experience, leading to improved Net Promoter Scores (NPS) and customer satisfaction.
United Airlines Holdings Inc (NASDAQ:UAL) has industry-leading contracts with four of its five major work groups, contributing to a stable workforce and positive labor relations.
Negative Points
The company faced challenges from the CrowdStrike outage and the suspension of flights to Tel Aviv and Aman, impacting operations and costs.
CASM ex (Cost per Available Seat Mile excluding fuel) was up 6.5% year-over-year, indicating pressure on costs despite capacity growth.
Delivery delays from Airbus and Boeing are expected to continue, affecting fleet expansion and potentially leading to a downward bias in capital expenditures.
The Asia Pacific network faced RASM (Revenue per Available Seat Mile) challenges due to headwinds in China and the South Pacific, impacting overall revenue performance.
The company is still in federal mediation with the Association of Flight Attendants (AFA), indicating ongoing labor negotiations that could affect operations.
Q & A Highlights
Q: How does United Airlines plan to capitalize on the evolving industry backdrop in 2025, especially with competitors making significant changes? A: J. Scott Kirby, United Airlines Holdings Inc - Independent Director, stated that United will focus on developing the United Next Plan, building connectivity in Mid-Con hubs, investing in customer experience, and capturing corporate traffic. The company aims to build products that customers want, increase high-yield share, and expand its global network.
Q: Can you update us on the United Next plan and the forecast for double-digit pretax margins by 2026? A: J. Scott Kirby explained that United anticipated an industry evolution leading to higher margins, similar to the 2012-2014 period. He noted that the inflection point has occurred, and margins are expected to expand significantly over the next three years, potentially by 8 to 9 points.
Q: What is the rationale behind United's international expansion strategy, and how do you choose new destinations? A: J. Scott Kirby highlighted that United's global gateways allow for successful flights to a broad range of destinations. The company looks for new, profitable destinations and has a strong track record of maintaining routes. The recent addition of Greenland, though small in system impact, is significant for brand and customer engagement.
Q: How are Boeing's production delays, particularly with the 777X, affecting United's supply and demand outlook? A: J. Scott Kirby noted that wide-body aircraft production lines are unlikely to meet demand in the next three to five years, creating a favorable setup for United's long-haul network. Michael Leskinen, CFO, added that 787 delays might lead to a downward bias in CapEx if delays continue.
Q: What are the implications of Boeing's strike on United's operations and schedule? A: J. Scott Kirby expressed confidence that Boeing will resolve the strike and emphasized the importance of Boeing's long-term focus. He acknowledged short-term impacts on aircraft deliveries but remains optimistic about Boeing's future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.