Company Reports

United Airlines reported first-quarter 2024 revenue and profit that somewhat exceeded our forecast even though the company also attributed a $200 million deficit in the quarter to the temporary grounding of its Boeing 737 MAX 9 fleet. With a $124 million adjusted operating loss in the quarter, the implication that the no-moat airline would have booked about $80 million in profit on $11.3 billion in revenue were it not for the Boeing grounding did not leave us impressed. United has also had to reshuffle its airplane order book to reflect delayed deliveries by Boeing, and as a result of the spaced-out and generally higher capital spending forecast from the company, we have lowered our fair value estimate to $35 from $38 per share.

Before the pandemic, much of United Airline's strategy focused on cutting costs to expand margins, which averaged 10.6% between 2015 and 2019. In 2021-22, United announced a series of aircraft orders for up to 200 Boeing 787 Dreamliners and 500 narrow-body aircraft to join its fleet by 2032. The strategy is to replace less-efficient and smaller jets to radically increase the average number of seats United can sell on an average flight, with more premium seats and legroom for those willing to pay up, and plenty of cheap seats that the company can sell to more leisurely travelers and compete with lower-cost airlines on many of its routes.

Before the pandemic, much of United Airline's strategy focused on cutting costs to expand margins, which averaged 10.6% between 2015 and 2019. In 2021-22, United announced a series of aircraft orders for up to 200 Boeing 787 Dreamliners and 500 narrow-body aircraft to join its fleet by 2032. The strategy is to replace less-efficient and smaller jets to radically increase the average number of seats United can sell on an average flight, with more premium seats and legroom for those willing to pay up, and plenty of cheap seats that the company can sell to more leisurely travelers and compete with lower-cost airlines on many of its routes.

United Airlines reported final 2023 results closely in line with our previous expectations. Management's discussion focused on a few industry trends that we believe United is positioned to benefit from, while they last. We've extended the time frame in which no-moat United is likely able to maintain high-single-digit operating margins, and we have raised our fair value estimate to $38 from $35 per share.

United Airlines reported third-quarter capacity and revenue right in line with our expectations, but growth in the no-moat airline's unit costs again outstripped our expectations. We maintain our $35 fair value estimate. We see a scenario emerging that may favor full service airlines like United, who can defray their costs across multiple segments of travelers. By contrast, no-frills airlines are experiencing similar cost growth but have nowhere to hide from sudden fuel price spikes this summer and a leveling off of domestic demand.

Before the pandemic, much of United's strategy focused on cutting costs to expand margins, which averaged 10.6% between 2015 and 2019. In 2021-22, United announced a series of aircraft orders for up to 200 Boeing 787 Dreamliners and 500 narrow-body aircraft to join its fleet by 2032. The strategy is to replace less-efficient and smaller jets to radically increase the average number of seats United can sell on an average flight, with more premium seats and leg room for those willing to pay up, and plenty of cheap seats that the company can sell to more leisurely travelers and compete with lower-cost airlines on many of its routes.

Before the pandemic, much of United's strategy focused on cutting costs to expand margins, which declined slightly between between 2015 and 2019, averaging 10.6%. In December 2022, United announced a giant order for 100 Boeing 787 Dreamliners with options to add 100 more. The airline now plans to add 700 narrow- and wide-body aircraft to its fleet by 2032. We expect these more efficient aircraft to boost United's capacity (available seat miles) and support margin expansion, which we forecast will reach 11.5% later this decade.

United AIrlines reported robust second-quarter results on July 19, slightly surpassing our expectations for passenger revenue and all but selling out capacity, but also outstripping our estimate of labor and maintenance costs, especially over coming quarters, resulting in a fair value estimate of $35 per share, down $1.

We have taken a fresh look at North American airlines and instituted an industry-based demand model for air travel, capacity, and airline revenue yields. As a result, we have lowered no-moat United Airlines' fair value estimate to $36 from $60 per share.

Before the pandemic, much of United's strategy focused on cutting costs to expand margins, which declined slightly between between 2015 and 2019, averaging 10.6%. In December 2022, United announced a giant order for 100 Boeing 787 Dreamliners with options to add 100 more. The airline now plans to add 700 narrow- and wide-body aircraft to its fleet by 2032. We expect these more efficient aircraft to boost United's capacity (available seat miles) and support margin expansion, which we forecast will reach 11.5% later this decade.

United Airlines reported brisk 51% revenue growth on 23.4% more capacity in the first quarter compared with 2022, a promising start to 2023 that we expect to meet management's full-year guidance. Despite its pretax loss of $256 million in the quarter (due to seasonally low winter travel), management expects 9% adjusted pretax margins with EPS of $10-$12 for 2023. After updating our assumptions to account for the quarter and a few near-term costs, we’ve raised our fair value estimate approximately 1.5% to $60.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue (prepandemic) coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

United Airlines’ financial performance improved throughout fiscal 2022, and the no-moat-rated airline finished the year with a strong fourth-quarter performance that topped FactSet consensus revenue and EPS estimates. Furthermore, the airline issued better-than-expected fiscal 2023 financial guidance. Notably, management expects the airline will achieve about a 9% pretax margin in 2023 with EPS of $10.00-$12.00. Previously, we had projected it would take the airline several years to achieve this level of profitability. After updating our valuation model to account for stronger near-term financial performance, we’ve raised our fair value estimate approximately 4% to $59 per share.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue (prepandemic) coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue (prepandemic) coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

We’ve maintained our $57 fair value estimate for United Airlines following the company's third-quarter earnings release. The no-moat airline reported strong results, with adjusted EPS of $2.81 exceeding the FactSet consensus estimate by more than 20%. Compared with the third quarter of 2019 (before the pandemic), passenger revenue per available seat mile increased approximately 20% and 29% for domestic and international routes, respectively. While United operated with about 10% less capacity (available seat miles) compared with 2019, pricing remains very robust—yield was about 22% higher than 2019—and load factors were modestly higher across both domestic and international routes.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

United Airlines is the most internationally focused U.S.-based carrier by operating revenue, with almost 40% of 2019 revenue coming from international activities. Before the coronavirus pandemic, much of the company's story focused on realizing cost efficiencies to expand margins.

No-moat-rated United Airlines posted a decent second quarter as demand for air travel surged, but provided a disappointing capacity outlook. Revenue of $12.1 billion and earnings per share of $1.43 missed FactSet consensus estimates by 0.1% and 22.9%, respectively. We are maintaining our $57 per share fair value estimate as we decrease our medium-term capacity outlook and increase our passenger yield and load-factor estimates.