United Airlines Announces Second-Quarter Financial Results.
Highlights:
* In addition to YOY EPS and pre-tax margin improvement, achieved highest quarterly adjusted EPS1 and second-quarter adjusted pre-tax margin1 in company history
* Expects full-year 2023 adjusted EPS2 to now be $11-$12
* Strengthened balance sheet-ahead of pace to reach FY23 leverage target
* Record-setting 2Q performance is clear evidence of 'United Next' success
CHICAGO- Airlines (UAL) today reported second-quarter 2023 financial results. The company reported quarterly earnings per share of $3.24 and pre-tax margin of 9.8%. The company set records on an adjusted basis1 with earnings per share of $5.03 and pre-tax margin of 15.3%. The strong financial performance has accelerated the company's efforts to restore its balance sheet, resulting in trailing twelve months adjusted net debt1 to adjusted EBITDAR1 of 2.4x, back to 2019 levels and ahead of its full year 2023 target of less than 3x. The momentum from the second quarter is expected to power the company to full year 2023 adjusted earnings per share2 of $11 to $12, up versus previous guidance of $10 to $12. The all-time quarterly highs in the second quarter and the bright outlook for the future are evidence that the United Next strategy to upgauge the airline, increase connectivity at its mid-continent hubs, and expand its industry leading global network is working.
The company's second quarter performance also benefited from the strength in its network. In the second quarter, United's domestic margins returned to 2019 levels while international margins were well above 2019. United continues to establish its position as the United States flag carrier, with a 27% increase in capacity internationally versus the same quarter last year. Looking to capitalize on demand for international travel, United announced earlier this week a second expansion of its Pacific flying this fall with new flights to Manila, Hong Kong, Taipei and Tokyo (Narita). The airline is expecting to maximize the success of its international business with the largest widebody aircraft order in history that it announced with Boeing in December 2022.
'The United team persevered through an unprecedented series of events at the end of last month. They are the best in the business and we're focused on the important changes we can make, especially in Newark, to serve our customers even better,' said United Airlines CEO Scott Kirby. 'United's financial performance in the second quarter and our outlook for the remainder of the year and beyond make it clear that United Next is working and is the right strategy at the right time. Our focus now is on executing that strategy well - because we know it will deliver huge benefits for our customers, our employees and our owners.'
Second-Quarter Financial Results
Capacity up 17.5% compared to second-quarter 2022.
Total operating revenue of $14.2 billion, up 17.1% compared to second-quarter 2022.
TRASM down 0.4% compared to second-quarter 2022.
CASM down 4.0%, and CASM-ex1 up 2.0%, compared to second-quarter 2022.
Pre-tax income of $1.4 billion, with a pre-tax margin of 9.8%; adjusted pre-tax income1 of $2.2 billion, with an adjusted pre-tax margin1 of 15.3%.
Net income of $1.1 billion, adjusted net income1 of $1.7 billion.
Earnings per share of $3.24, adjusted earnings per share1 of $5.03.
Average fuel price per gallon of $2.66.
Trailing twelve months adjusted net debt1 to adjusted EBITDAR1 of 2.4x.
Key Highlights
Raised $1.3 billion from an offering of enhanced equipment trust certificates (EETC).
Pre-paid $1 billion of high-coupon debt.
Launched self-service tool in United's award-winning app that automatically presents travelers personalized re-booking options, bag tracking information and meal and hotel vouchers when eligible if their flight is delayed or cancelled.
Carried the highest volume of revenue passengers since pre-pandemic.
In June, achieved highest month for new enrolled members of the MileagePlus program with approximately 800,000 new members.
Introduced a blend of sustainable aviation fuel (SAF) on departing flights from San Francisco International Airport, making it the third airport where United uses SAF. Also announced plans to use a SAF blend later this summer at London Heathrow Airport.
Operational Performance
Flew a daily average of more than 2,400 flights, the most mainline flights in a quarter in company history.
Achieved largest percentage of mainline operated flights in history, with 60% of flights flown by mainline aircraft.
Increased number of departures on two-cabin aircraft to 87% of departures, versus 68% in second-quarter 2019.
Customer Enhancements
First airline to launch Live Activities for iPhone, giving customers real-time access to their boarding pass, gate and seat number, and countdown clock to departure time.
Opened the company's newest United ClubSM in Newark Liberty Airport's new Terminal A.
Added United Polaris cabin meal pre-orders on widebody international flights starting in July.
Network
Flew United's largest schedule across the Atlantic ever, 32% larger than United's 2019 schedule and 10% larger than the next largest US carrier.
Launched six new international trans-Atlantic routes between Malaga, Spain and Newark/New York, Stockholm, Sweden and Newark/New York, Berlin, Germany and Washington D.C., Barcelona, Spain and Chicago, Shannon, Ireland and Chicago, and Rome, Italy and San Francisco.
Announced the largest South Pacific expansion in aviation history, becoming the only airline to offer direct service to Christchurch, New Zealand from the Continental United States, via San Francisco, and two new routes between Los Angeles and both Auckland, New Zealand and Brisbane, Australia (subject to government approval).
Announced large expansion of destinations from its Denver hub, with 35 flights and six new non-stop flights at Denver International Airport including four destinations not served by any other Denver airline. This summer United has more than 50% more flights and destinations than the airline's nearest competitor and will fly its largest schedule in company history from the hub.
Communities
Welcomed nine new corporate participants to its Eco-Skies Alliance program, set up to contribute to the purchase of sustainable aviation fuel ('SAF'). To date the program has invested in the future production of more than five billion gallons of SAF.
Announced official front-of-shirt sponsorship for Wrexham AFC, the recently promoted Welsh soccer team.
Provided more than 40,000 pounds of relief cargo, 150 volunteers, and multiple humanitarian flights to Guam to provide support following Super Typhoon Mawar.
Employees volunteered nearly 5,000 hours at more than 200 events across the globe with a number of non-profit partner organizations.
Over 4.4 million miles donated by MileagePlus members to more than 40 non-profit organizations via the Miles on a MissionSM program.
Provided more than $1 million of financial support to environmental and disaster relief partners supporting volunteer efforts.
Participated in 9 Pride parade activations across United's network.
Earnings Call
UAL will hold a conference call to discuss second quarter 2023 financial results, as well as its financial and operational outlook for third quarter 2023 and beyond, on Thursday, July 20, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.
Outlook
This press release should be read in conjunction with the company's Investor Update issued in connection with this quarterly earnings announcement, which provides additional information on the company's business outlook (including certain financial and operational guidance) and is furnished with this press release with the U.S. Securities and Exchange Commission on a Current Report on Form 8-K. The Investor Update is also available at ir.united.com. Management will also discuss certain business outlook items during the quarterly earnings conference call.
The company's business outlook is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release. Please see the section entitled 'Cautionary Statement Regarding Forward-Looking Statements.'
About United
At United, Good Leads The WaySM. With U.S. hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C., United operates the most comprehensive global route network among North American carriers, and is now the largest airline in the world as measured by available seat miles. For more about how to join the United team, please visit www.united.com/careers and more information about the company is at www.united.com. United Airlines Holdings, Inc., the parent company of United Airlines, Inc., is traded on the Nasdaq under the symbol 'UAL'.
Website Information
We routinely post important news and information regarding United on our corporate website, www.united.com, and our investor relations website, ir.united.com. We use our investor relations website as a primary channel for disclosing key information to our investors, including the timing of future investor conferences and earnings calls, press releases and other information about financial performance, reports filed or furnished with the U.S. Securities and Exchange Commission, information on corporate governance and details related to our annual meeting of shareholders. We may use our investor relations website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We may also use social media channels to communicate with our investors and the public about our company and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels are not incorporated by reference into, and are not a part of, this document.
Cautionary Statement Regarding Forward-Looking Statements:
This press release and the related attachments and Investor Update (as well as the oral statements made with respect to information contained in this release and the attachments) contain certain 'forward-looking statements,' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to, among other things, goals, plans and projections regarding the company's financial position, results of operations, market position, capacity, fleet, announced routes (which may be subject to government approval), product development, ESG targets and business strategy. Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about the company's future financial results, goals, plans, commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond the company's control and could cause the company's future financial results, goals, plans, commitments, strategies and objectives to differ materially from those expressed in, or implied by, the statements. Words such as 'should,' 'could,' 'would,' 'will,' 'may,' 'expects,' 'plans,' 'intends,' 'anticipates,' 'indicates,' 'remains,' 'believes,' 'estimates,' 'projects,' 'forecast,' 'guidance,' 'outlook,' 'goals,' 'targets,' 'pledge,' 'confident,' 'optimistic,' 'dedicated,' 'positioned' and other words and terms of similar meaning and expression are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. All statements, other than those that relate solely to historical facts, are forward-looking statements.
Additionally, forward-looking statements include conditional statements and statements that identify uncertainties or trends, discuss the possible future effects of known trends or uncertainties, or that indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law or regulation.
Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: execution risks associated with our strategic operating plan; changes in our network strategy or other factors outside our control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or integrate new aircraft into our fleet as planned; any failure to effectively manage, and receive anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions, or related exposures to unknown liabilities or other issues or underperformance as compared to our expectations; the adverse impacts of the ongoing COVID-19 global pandemic on our business, operating results, financial condition and liquidity; adverse publicity, harm to our brand, reduced travel demand, potential tort liability and voluntary or mandatory operational restrictions as a result of an accident, catastrophe or incident involving us, our regional carriers, our codeshare partners or another airline; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity, including as a result of alliances, joint business arrangements or other consolidations; our reliance on a limited number of suppliers to source a majority of our aircraft and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; disruptions to our regional network and United Express flights provided by third-party regional carriers; unfavorable economic and political conditions in the United States and globally (including inflationary pressures); reliance on third-party service providers and the impact of any significant failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; extended interruptions or disruptions in service at major airports where we operate and space, facility and infrastructure constrains at our hubs or other airports; geopolitical conflict, terrorist attacks or security events; any damage to our reputation or brand image; our reliance on technology and automated systems to operate our business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; increasing privacy and data security obligations or a significant data breach; increased use of social media platforms by us, our employees and others; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions or regulatory compliance costs on our operations; any failure to attract, train or retain skilled personnel, including our senior management team or other key employees; the monetary and operational costs of compliance with extensive government regulation of the airline industry; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate change, including our climate goals; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel (including as a result of the Russia-Ukraine military conflict); the impacts of our significant amount of financial leverage from fixed obligations and the impacts of insufficient liquidity on our financial condition and business; failure to comply with financial and other covenants governing our debt, including our MileagePlus financing agreements; the impacts of the proposed phaseout of the London interbank offer rate; limitations on our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S. federal income tax purposes; our failure to realize the full value of our intangible assets or our long-lived assets, causing us to record impairments; fluctuations in the price of our common stock; the impacts of seasonality, weather events, infrastructure and other factors associated with the airline industry; increases in insurance costs or inadequate insurance coverage and other risks and uncertainties set forth in Part I, Item 1A. Risk Factors, and under 'Economic and Market Factors' in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as other risks and uncertainties set forth from time to time in the reports we file with the U.S. Securities and Exchange Commission.
Non-GAAP Financial Information:
In discussing financial results and guidance, the company refers to financial measures that are not in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP and are presented because management believes that they supplement or enhance management's, analysts' and investors' overall understanding of the company's underlying financial performance and trends and facilitate comparisons among current, past and future periods. Non-GAAP financial measures such as adjusted operating margin (which excludes special charges), CASM-ex (which excludes the impact of fuel expense, profit sharing, special charges and third-party expenses), adjusted pre-tax margin (which is calculated as pre-tax margin excluding operating and nonoperating special charges and unrealized (gains) losses on investments, net) and adjusted net income typically have exclusions or adjustments that include one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded because the company believes they neither relate to the ordinary course of the company's business nor reflect the company's underlying business performance.
Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related GAAP financial measures presented in the press release and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Please refer to the tables accompanying this release for a description of the non-GAAP adjustments and reconciliations of the historical non-GAAP financial measures used to the most comparable GAAP financial measure and related disclosures.
tables attached- See full release at:
https://www.united.com/en/us/newsroom/announcements/cision-125278
The provision for income taxes for the three and six months ended June 30, 2023 is based on the estimated annual effective tax rate, which represents a blend of federal, state and foreign taxes and includes the impact of certain nondeductible items. The provision for income taxes for the three and six months ended June 30, 2022 was calculated using a discrete effective tax rate method. We determined that applying an estimate of the annual effective tax rate to income or loss for the interim reporting period would not provide a reliable estimate for the three and six months ended June 30, 2022, since small changes in estimated income would have resulted in significant changes in the estimated annual effective tax rate.
UNITED AIRLINES HOLDINGS, INC. 
