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United Airlines (UAL) reported better-than-expected second quarter results on Tuesday, and the carrier said it expected demand to recover fully by 2023.
United also said they expected positive adjusted pre-tax profit in the third and fourth quarters. And he said he expected positive growth in total unit income in the third quarter compared to the third quarter of 2019 – his first since the second quarter of last year.
The carrier announced the results as investors weighed the rebound in the U.S. airline industry amid growing concerns over the spread of the delta variant of the coronavirus. UAL’s stock slipped after hours.
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United Airlines Earnings
United lost $ 3.91 per share. It was better than expected for a loss of $ 4.01 per share. Revenue of $ 5.5 billion exceeded estimates of $ 5.335 billion.
“The company’s second quarter performance far exceeded initial expectations as long-haul international travel and business travel accelerated even faster than expected, along with continued improvement in returns,” said United in a statement.
“Looking ahead, the company expects continued gains as more businesses return by the end of summer and into 2022, with a full recovery in demand expected by 2023,” said declared the company.
United ended the quarter with $ 1.5 billion in free cash flow.
For the third quarter, United expects flight capacity to be down around 26% from the third quarter of 2019.
Last week, Delta Airlines (DAL) released second quarter results that easily outperformed revenues. The carrier also reported a lower than expected loss and positive cash flow. Delta also said it would add Boeing (BA) and Airbus (EADSY) to its fleet, citing a rebound in demand.
American Airlines (AAL) also gave preliminary second quarter numbers that weren’t as bad as expected. The company also said it expected a positive average daily cash increase for the first time since the start of the pandemic.
UAL stock
United shares fell 0.4% after hours on the market today, after recovering in the regular session.
But UAL stock has fallen more than 20% since early June. It has a low composite score of 4. Its EPS index is also 4.
Shares of other airlines rose as well. The delta rose 4.4%. The American gained 5.2%. South West (LUV) is up 4.7%.
Tuesday’s gains for the sector marked a reversal from weeks of decline. IBD’s ratings for airline stocks, however, remain low after the pandemic shutdown of the travel industry caused airlines to lose money.
In recent weeks, the increase in coronavirus cases and the spread of the more contagious delta variant of the virus have placed a greater risk on the emergence of the world after last year’s lockdowns. The researchers said the risk of serious illness is much lower for those vaccinated.
Leisure travel, business rebound
CEO Scott Kirby, at an investor meeting in June, said business travel trends were still submerged from pre-pandemic levels. But he said business travel will start to rebound in earnest after Labor Day.
“I don’t think it’ll come back completely until 2023, but I’m beyond saying I’m confident it’s going to come back,” he said.
Stifel Airlines’ equity analyst Joseph DeNardi, in a research note last week, said that while domestic leisure travel gains momentum, the recovery in business travel is likely to be more. slow for United. Internationally, countries have instituted travel restrictions and others. Immunization rates around the world have been uneven.
“We don’t expect too many changes on the business front or in international demand over the next two months, but the picture may become clearer after Labor Day,” he said. “For now, United’s greater exposure to corporate demand and international demand remains a relative headwind.”
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