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Highlights:
United Airlines is scheduled to release its Q3 2024 financial results on October 16, with projected revenues of $14.85 billion and earnings per share of $3.15.
The company is anticipated to face lower passenger yields and rising costs, with an expected year-over-year decline in passenger revenue per available seat mile (PRASM).
Despite challenges, United Airlines is benefiting from increased capacity, although occupancy and yields may be lower compared to the prior year.
United Airlines (NASDAQ:UAL) is preparing to announce its financial results for the third quarter of 2024 on October 16. Analysts anticipate the company will report revenues of $14.85 billion and adjusted earnings per share (EPS) of $3.15, slightly surpassing consensus estimates of $14.78 billion and $3.12, respectively. The quarter is expected to reflect challenges such as decreased passenger yields and heightened operational costs.
In Q3, United Airlines is projected to benefit from an increase in capacity; however, occupancy rates and yields are likely to trend lower compared to the same quarter last year. The airline is also facing elevated non-fuel costs, primarily driven by wage increases. The PRASM, which measures passenger revenue generated per available seat mile, is forecasted to decline by a low single-digit percentage year-over-year, reaching approximately $16.80. Consequently, the adjusted bottom line is expected to decrease by 14%.
Looking back at Q2, United Airlines reported a revenue increase of 5.7% year-over-year, totaling $15 billion. The available seat miles rose by 8.3%, while PRASM decreased by 2.9%. The airline's adjusted pre-tax margin fell to 12.1%, down from 15.3% in the previous year, and the adjusted EPS for Q2 was $4.14 compared to $5.03 in Q2 2023. The airline provided guidance for Q3 adjusted EPS in the range of $2.75 to $3.25.
In terms of stock performance, analysts suggest limited growth potential for UAL stock, estimating a valuation of approximately $64 per share, representing less than 10% upside from its current levels around $60. While a slight earnings beat in Q3 may positively influence the stock price, attention will be paid to any revisions in earnings estimates, as well as trends in average yields and occupancy rates, which could significantly impact short-term stock movement.
