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United Airlines Surged Over 3% on Strong First-Quarter Earnings

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United Airlines surpassed estimates

United Airlines (UAL) stock gained over 3% in after-hours trading on April 16 after the company released strong first-quarter results. Its adjusted EPS doubled from the year-ago quarter and surpassed Wall Street analysts’ estimates as well.

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The company’s first-quarter adjusted EPS of $1.15 surpassed Wall Street analysts’ consensus estimate of $0.95 and marked YoY growth of 130%. With the latest upbeat bottom-line performance, the company has surpassed analysts’ earnings estimates in 12 of the last 13 quarters with an average surprise of 6.8%.

Driving factors

Strong revenue growth, lower fuel costs, and efficient cost management mainly drove United Airlines’ first-quarter earnings. The airline’s first-quarter revenues increased 6.2% YoY to $9.59 billion, almost in line with analysts’ expectations of $9.61 billion.

Robust growth in non-ticket sources along with an increase in the unit revenue mainly drove the company’s first-quarter revenue higher. The airline’s unit revenue for the quarter rose 1.1% due to strong travel demand. Notably, the company reported a strong top and bottom-line performance despite the negative impact from the partial government shutdown in January and the grounding of its 14 Boeing 737 Max jets since mid-March.

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United Airlines’ ex-fuel CASM (cost per available seat mile) fell 1.8% mainly due to its fleet transformation initiatives and cost-control measures. Increased revenues and lower costs helped the company’s adjusted pre-tax margin expand by 210 basis points to 4.1% during the quarter from 2% in the same quarter the previous year.

Furthermore, United Airlines’ bottom-line results also benefited from a 2.8% fall in average aircraft fuel price per gallon. Notably, WTI oil prices have traded in the range of $50–60 per barrel during the first quarter of 2019, down from the $60–70 per barrel it traded at during the same quarter of the previous year.

Peers gained on upbeat performance

The stocks of most US air carriers (IYT) were also up in after-hours trading yesterday after United Airlines reported strong first-quarter earnings results. American Airlines (AAL), Southwest Airlines (LUV), and Delta Airlines (DAL) were all up over 1% in late trading hours yesterday.

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