United Airlines Updates Q1 Guidance and Issues Strong Outlook



United Continental updates outlook

United Continental (UAL), United Airlines’ parent company, recently updated its first-quarter guidance and issued a strong earnings outlook for the next fiscal year. UAL president Scott Kirby updated the company’s outlook during JPMorgan Chase’s (JPM) Aviation, Transportation and Industrials Conference in New York on March 5.

In the first quarter, the company now expects its unit revenue to grow near the midpoint of its previous forecast of 0%–3% growth. It also expects its adjusted pre-tax margin to come closer to the midpoint of its previous guidance of 2.5%–4.5% growth.

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However, the company maintained its other expectations for the first quarter and fiscal 2019. It still expects its consolidated capacity to grow 5%–6% and its ex-fuel costs per available seat mile to improve YoY (year-over-year) in the first quarter. Fuel costs per gallon are anticipated to stay at $2–$2.05.

The airline also reaffirmed its adjusted EPS guidance of $10–$12 for 2019, suggesting 20.5% YoY growth at the midpoint. However, this guidance fell short of analysts’ average estimate of $11.32.

Kirby provided an optimistic outlook for the next year during the conference. He expects UAL’s adjusted EPS to be $11–$13 in 2020, with the midpoint falling close to analysts’ average EPS estimate of $12.16.

Other airlines update outlook

At the JPMorgan Chase event, other major US airlines (IYT) also updated their first-quarter outlook. Delta Air Lines (DAL) said that demand has remained healthy this year, led by corporate passengers. Therefore, it is confident about achieving its first-quarter financial targets.

On the other hand, JetBlue (JBLU) and Alaska Air Group (ALK) lowered their unit revenue guidance for the quarter. JetBlue now expects unit revenue to fall 1.5%–3.4%, more than its earlier projection of a 1% decline. Alaska Air has adjusted its first-quarter unit revenue growth guidance to 1%–2% from 2.5%–4.5%.


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