United Airlines (UAL) today reported first-quarter 2024 financial results. The company had a pre-tax loss of $164 million, a $92 million improvement over the same quarter last year; an adjusted pre-tax loss1 of $79 million, a $187 million improvement on an adjusted basis over the same quarter last year. These earnings reflect the approximately $200 million impact from the Boeing 737 MAX 9 grounding, without which the company would have reported a quarterly profit. In the quarter, the company generated $2.8 billion in operating cash flow and free cash flow1 of $1.5 billion. The company continues to expect full-year 2024 adjusted diluted earnings per share3 of $9 to $11.
United delivered strong financial and operational performance in the quarter. The demand environment remained strong with a double-digit percentage increase in business demand quarter over quarter, as compared to pre-pandemic. Additionally, the company was able to take advantage of a number of opportunities to adjust domestic capacity which drove meaningful improvements in first quarter profitability. Atlantic and Domestic markets both saw large passenger revenue per available seat mile (PRASM) increases year over year, with 11% and 6% growth respectively.
"I want to thank the United team for working so hard this quarter to deliver strong operational metrics for our customers and sharpen our focus on safety, while producing excellent financial results for our shareholders," said United Airlines CEO Scott Kirby. "We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver. And, we'll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs."
Fleet Update
United has made several adjustments to its long-term fleet strategy based on future needs of the airline and manufacturers production and delivery timelines that are expected to smooth out and moderate the company's aircraft delivery schedule in the coming years including:
In the short run, the company expects a small number of aircraft previously scheduled to enter into service in the second quarter to be pushed into the third quarter, which is expected to have minimal impact on the company's capacity plans.
First-Quarter Financial Results
Key Highlights
Customer Experience
Operations
Network
Employees, Sustainability & Communities
Earnings Call
UAL will hold a conference call to discuss first quarter financial results, as well as its financial and operational outlook for the second-quarter 2024 and beyond, on Wednesday, April 17, at 9:30 a.m. CST/10:30 a.m. EST. 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 to 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, including providing certain full year 2024 financial targets, 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 Way. With 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. 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 plan strategy, announced routes (which may be subject to government approval), product development, ESG-related strategy initiatives 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," "on track" 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 fleet and 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 aircraft orders on less favorable terms, as well as any inability to accept or integrate new aircraft into our fleet as planned, including as a result of any mandatory groundings of aircraft; 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; adverse publicity, harm to our brand, reduced travel demand, potential tort liability and 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, engines 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; 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 constraints at our hubs or other airports; geopolitical conflict, terrorist attacks or security events (including the continuation of the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and an escalation of the broader economic consequences of the Russia-Ukraine military conflict and the Israeli-Hamas military conflict beyond their current scope); 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, these technologies or systems; increasing privacy, data security and cybersecurity 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 agreement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate change, and any failure to achieve or demonstrate progress towards 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; 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" and "Governmental Actions" 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, 2023, 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 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, unrealized (gains) losses on investments, net and debt extinguishment and modification fees), adjusted pre-tax income, adjusted earnings per share 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-
UNITED AIRLINES HOLDINGS, INCSTATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) | ||||||
Three Months Ended March 31, | %Increase/(Decrease) | |||||
(In millions, except for percentage changes and per share data) | 2024 | 2023 | ||||
Operating revenue: | ||||||
Passenger revenue | $ 11,313 | $ 10,274 | 10.1 | |||
Cargo | 391 | 398 | (1.8) | |||
Other operating revenue | 835 | 757 | 10.3 | |||
Total operating revenue | 12,539 | 11,429 | 9.7 | |||
Operating expense: | ||||||
Salaries and related costs | 3,932 | 3,322 | 18.4 | |||
Aircraft fuel | 2,954 | 3,174 | (6.9) | |||
Landing fees and other rent | 804 | 717 | 12.1 | |||
Aircraft maintenance materials and outside repairs | 773 | 702 | 10.1 | |||
Depreciation and amortization | 708 | 655 | 8.1 | |||
Regional capacity purchase | 585 | 615 | (4.9) | |||
Distribution expenses | 480 | 403 | 19.1 | |||
Aircraft rent | 43 | 56 | (23.2) | |||
Special charges | 13 | 14 | NM | |||
Other operating expenses | 2,148 | 1,814 | 18.4 | |||
Total operating expense | 12,440 | 11,472 | 8.4 | |||
Operating income (loss) | 99 | (43) | NM | |||
Nonoperating income (expense): | ||||||
Interest expense | (454) | (486) | (6.6) | |||
Interest income | 177 | 170 | 4.1 | |||
Interest capitalized | 61 | 38 | 60.5 | |||
Unrealized gains (losses) on investments, net | (37) | 24 | NM | |||
Miscellaneous, net | (10) | 41 | NM | |||
Total nonoperating expense, net | (263) | (213) | 23.5 | |||
Loss before income tax benefit | (164) | (256) | (35.9) | |||
Income tax benefit | (40) | (62) | (35.5) | |||
Net loss | $ (124) | $ (194) | (36.1) | |||
Diluted loss per share | $ (0.38) | $ (0.59) | (35.6) | |||
Diluted weighted average shares | 328.3 | 327.4 | 0.3 | |||
NM-Greater than 100% change or otherwise not meaningful. |
UNITED AIRLINES HOLDINGS, INC.PASSENGER REVENUE INFORMATION AND STATISTICS (UNAUDITED) | |||||||||||||
Information is as follows (in millions, except for percentage changes): | |||||||||||||
1Q 2024PassengerRevenue | PassengerRevenuevs.1Q 2023 | Passenger Revenue per Available Seat Mile ("PRASM") vs. 1Q 2023 | Yield vs. 1Q 2023 | AvailableSeat Miles ("ASMs")vs.1Q 2023 | 1Q 2024 ASMs | 1Q 2024 Revenue Passenger Miles ("RPMs") | |||||||
Domestic | $ 6,916 | 6.6 % | 6.1 % | 2.6 % | 0.5 % | 38,712 | 32,389 | ||||||
Europe | 1,408 | 11.7 % | 12.0 % | 7.8 % | (0.1 %) | 10,162 | 7,474 | ||||||
Pacific | 1,388 | 44.3 % | (12.9 %) | (3.5) % | 65.8 % | 11,856 | 8,377 | ||||||
Latin America | 1,329 | 9.6 % | (12.7 %) | (10.0 %) | 25.5 % | 8,913 | 7,538 | ||||||
Middle East/India/Africa | 272 | (23.2 %) | 5.3 % | 9.2 % | (27.0 %) | 2,025 | 1,649 | ||||||
International | 4,397 | 16.0 % | (4.2 %) | (1.0 %) | 21.1 % | 32,956 | 25,038 | ||||||
Consolidated | $ 11,313 | 10.1 % | 1.0 % | 0.7 % | 9.1 % | 71,668 | 57,427 | ||||||
Select operating statistics are as follows: | |||||||
Three Months Ended March 31, | %Increase/(Decrease) | ||||||
2024 | 2023 | ||||||
Passengers (thousands) (a) | 39,325 | 36,822 | 6.8 | ||||
RPMs (millions) (b) | 57,427 | 52,532 | 9.3 | ||||
ASMs (millions) (c) | 71,668 | 65,720 | 9.1 | ||||
Passenger load factor: (d) | |||||||
Consolidated | 80.1 % | 79.9 % | 0.2 pts. | ||||
Domestic | 83.7 % | 80.9 % | 2.8 pts. | ||||
International | 76.0 % | 78.5 % | (2.5) pts. | ||||
PRASM (cents) | 15.79 | 15.63 | 1.0 | ||||
Total revenue per available seat mile ("TRASM") (cents) | 17.50 | 17.39 | 0.6 | ||||
Average yield per RPM (cents) (e) | 19.70 | 19.56 | 0.7 | ||||
Cargo revenue ton miles (millions) (f) | 852 | 731 | 16.6 | ||||
Aircraft in fleet at end of period | 1,366 | 1,337 | 2.2 | ||||
Average stage length (miles) (g) | 1,481 | 1,432 | 3.4 | ||||
Employee headcount, as of March 31 (in thousands) | 104.5 | 96.3 | 8.5 | ||||
Cost per ASM ("CASM") (cents) | 17.36 | 17.46 | (0.6) | ||||
CASM-ex (cents) (h) | 13.13 | 12.54 | 4.7 | ||||
Average aircraft fuel price per gallon | $ 2.88 | $ 3.33 | (13.5) | ||||
Fuel gallons consumed (millions) | 1,025 | 952 | 7.7 |
_____________________________________ |
(a) The number of revenue passengers measured by each flight segment flown. |
(b) The number of scheduled miles flown by revenue passengers. |
(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown. |
(d) RPMs divided by ASMs. |
(e) The average passenger revenue received for each RPM flown. |
(f) The number of cargo revenue tons transported multiplied by the number of miles flown. |
(g) Average stage length equals the average distance a flight travels weighted for size of aircraft. |
(h) CASM-ex is CASM less the impact of fuel expense, profit sharing, special charges and third-party expenses. See NON-GAAP FINANCIAL INFORMATION for a reconciliation of CASM-ex to CASM, the most comparable GAAP measure. |
UNITED AIRLINES HOLDINGS, INC.
1 NON-GAAP FINANCIAL INFORMATION
UAL evaluates its financial performance utilizing various accounting principles generally accepted in the United States of America (GAAP) and non-GAAP financial measures, including adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), adjusted EBITDA margin, adjusted EBITDA excluding aircraft rent (adjusted EBITDAR), adjusted operating income (loss), adjusted operating margin, adjusted pre-tax income (loss), adjusted pre-tax margin, adjusted net income (loss), adjusted diluted earnings (loss) per share, CASM-ex, adjusted capital expenditures, adjusted total debt, adjusted net debt, free cash flow, and free cash flow, net of financings, among others. 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.
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.
The company does not provide a reconciliation of forward-looking measures where the company believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors and is unable to reasonably predict certain items contained in the GAAP measures without unreasonable efforts. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and are out of the company's control or cannot be reasonably predicted. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. See "Cautionary Statement Regarding Forward-Looking Statements" above. The information below provides an explanation of certain adjustments reflected in the non-GAAP financial measures and shows a reconciliation of non-GAAP financial measures reported in this press release to the most directly comparable GAAP financial measures. Within the financial tables presented, certain columns and rows may not add due to the use of rounded numbers. Percentages and earnings per share amounts presented are calculated from the underlying amounts.
CASM: CASM is a common metric used in the airline industry to measure an airline's cost structure and efficiency. UAL reports CASM excluding special charges, third-party business expenses, fuel expense, and profit sharing. UAL believes that adjusting for special charges is useful to investors because those items are not indicative of UAL's ongoing performance. UAL also believes that excluding third-party business expenses, such as maintenance, flight academy, ground handling and catering services for third parties, provides more meaningful disclosure because these expenses are not directly related to UAL's core business. UAL also believes that excluding fuel expense from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence. UAL excludes profit sharing because it believes that this exclusion allows investors to better understand and analyze UAL's operating cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
Adjusted EBITDA and EBITDAR: UAL also reports EBITDA and EBITDAR excluding special charges, nonoperating unrealized (gains) losses on investments, net and nonoperating debt extinguishment and modification fees. UAL believes that adjusting for these items is useful to investors because they are not indicative of UAL's ongoing performance.
Adjusted Capital Expenditures and Free Cash Flow: UAL believes that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures. UAL also believes that adjusting net cash provided by (used in) operating activities for capital expenditures, net of flight equipment purchase deposit returns, adjusted capital expenditures, and aircraft operating lease additions is useful to allow investors to evaluate the company's ability to generate cash that is available for debt service or general corporate initiatives.
Adjusted Total Debt and Adjusted Net Debt: Adjusted total debt is a non-GAAP financial measure that includes current and long-term debt, operating lease obligations and finance lease obligations, current and noncurrent other financial liabilities and noncurrent pension and postretirement obligations. Adjusted net debt is adjusted total debt minus cash, cash equivalents and short-term investments. UAL provides adjusted total debt and adjusted net debt because we believe these measures provide useful supplemental information for assessing the company's debt and debt-like obligation profile.
Three Months Ended March 31, | %Increase/(Decrease) | |||||
CASM-ex (in cents, except for percentage changes) | 2024 | 2023 | ||||
CASM (GAAP) | 17.36 | 17.46 | (0.6) | |||
Fuel expense | 4.13 | 4.83 | (14.5) | |||
Third-party business expenses | 0.08 | 0.06 | 33.3 | |||
Special charges | 0.02 | 0.03 | NM | |||
CASM-ex (Non-GAAP) | 13.13 | 12.54 | 4.7 |
UNITED AIRLINES HOLDINGS, INC.NON-GAAP FINANCIAL INFORMATION (Continued) | ||||||||
Three Months Ended March 31, | Twelve Months Ended March 31, | |||||||
Adjusted EBITDA and EBITDAR (in millions) | 2024 | 2023 |
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