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What's in the Offing for United Airlines (UAL) in Q4 Earnings?

United Airlines UAL is scheduled to report fourth-quarter 2021 earnings numbers on Jan 19, after market close.

The company has incurred losses for seven consecutive quarters as coronavirus concerns continue to weigh on air-travel demand.

Let’s see how things are shaping up for this earnings season.

Factors to Note

Despite being below the pre-pandemic levels, air-travel demand has significantly improved from the lows of 2020. This is expected to have boosted United Airlines’ passenger revenues in the soon-to-be-reported quarter. A strong Thanksgiving holiday travel period is likely to have aided its performance. The Zacks Consensus Estimate for fourth-quarter passenger revenues indicates a surge of more than 100% from the year-ago reported number. It also suggests a 2.1% increase from the sequential quarter’s reported figure.

However, the spate of flight cancellations from Christmas Eve through the end of the year due to Omicron-induced woes and inclement weather conditions might have pushed up UAL’s unit costs, hurting the bottom line in turn. Evidently, the Zacks Consensus Estimate for fourth-quarter CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, shows a 5.1% increase from the third-quarter 2021’s reported number.

With fuel expenses comprising a major chunk of airline expenditures, rising fuel costs might have further dampened United Airlines’ bottom line in the fourth quarter. The Zacks Consensus Estimate for average fuel price per gallon implies an 11.7% increase from the sequential quarter’s reported number. The company predicts fuel price to be $2.39 per gallon in the fourth quarter, higher than $2.14 reported in the third quarter.

With air-travel demand continuing to be below the pre-pandemic levels, United Airlines expects total revenues to decline 25-30% in the fourth quarter from the comparable period in 2019.

Earnings Whispers

Our proven model predicts an earnings beat for United Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: United Airlines has an Earnings ESP of +6.58% as the Most Accurate Estimate is pegged at a loss of $2.09, while the Zacks Consensus Estimate is poised at a loss of $2.24. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: United Airlines carries a Zacks Rank #3.

Highlights of Q3 Earnings

United Airlines incurred a loss (excluding $2.46 from non-recurring items) of $1.02 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.65. Operating revenues of $7,750 million surpassed the Zacks Consensus Estimate of $7639.7 million. The top line surged more than 200% year over year with passenger revenues accounting for 85.6% of the top line, soaring more than 300% to $6,637 million.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider C.H. Robinson Worldwide CHRW, Southwest Airlines LUV and Landstar System LSTR as these stocks too possess the right combination of elements to beat on earnings this reporting cycle.

C.H. Robinson currently has an Earnings ESP of +7.82% and a Zacks Rank #3. The company will report fourth-quarter 2021 results on Feb 2.

Favorable pricing and higher volumes, owing to improved freight market conditions are expected to have aided C.H. Robinson’s fourth-quarter performance.

Southwest Airlines has an Earnings ESP of +172.73% and is currently a #3 Ranked player. The company will release fourth-quarter 2021 results on Jan 27.

Southwest Airlines expects to be profitable in the fourth quarter of 2021 owing to a strong Thanksgiving holiday travel period, higher fares and benefits from the co-brand credit card agreement with Chase.

Landstar System has an Earnings ESP of +3.19% and is Zacks #3 Ranked, presently. The company will release fourth-quarter 2021 results on Jan 26.

Landstar’s fourth-quarter performance is expected to have benefited from higher truck rates and strong freight demand.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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United Airlines Holdings Inc (UAL): Free Stock Analysis Report
Southwest Airlines Co. (LUV): Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report
Landstar System, Inc. (LSTR): Free Stock Analysis Report
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