What To Expect From UAL’s Q4 Earnings

by Trefis Team
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United Continental Holdings
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United Continental (NYSE:UAL) posted a better than expected quarter last time around. However, investors were not happy with how things went on the previous call. The company witnessed its value plummet by more than 12% post the earnings call, when upper management spooked investors into a selling frenzy after failing to answer Wall Street analysts’ questions. Analysts called into question the company’s growth initiatives that have, so far, failed to work as hoped for.

That said, things have definitely improved for the airline this time around. Apart from growing investor confidence, adverse effects from the hurricane also seem to be finally dissipating. This is evident from the company’s impressive price performance in the quarter. The stock is up by almost 28% since.

  • In all likeliness, it appears as though United’s top line will be driven by higher passenger revenues caused by a heavy increase in holiday travel this time around. In fact, the airline reported exceptional performance through the Thanksgiving weekend, breaking various records.
  • Additionally, the company recently issued a rather improved outlook in comparison to the last earnings call. PRASM, a key measure of unit revenue, is expected to come in flat year over year. According to the earlier guidance, this metric was expected to come in the range of negative 2% to flat. Further, pre-tax margin (adjusted) is anticipated to lie between 6-7%. Previous guidance figures had pegged the range to be around 3-5%.

                      

 

  • However, as expected, the company’s bottom line growth will be hurt on increased costs. Fuel price is expected to come in significantly higher at $1.91. Furthermore, CASM ex-fuel is estimated to increase by about 1.5-2% in Q4.

                      

 

 

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