2023-03-13 16:31:51 ET
United Airlines Holdings ( NASDAQ: UAL ) shares slumped after the bell on Monday after providing a pessimistic outlook for the first quarter of 2023.
The company said that it now expects an adjusted loss per share between $0.60 and $1.00 in Q1 due to expenses related to “a potential new collective bargaining agreement with employees represented by the Air Line Pilots Association.” The airline had previously expected to accrue the expense in the second quarter.
“The Company continues to see a strong demand environment and now expects first quarter 2023 total operating revenue to be up approximately 51% versus first quarter 2022, higher than the Company's initial approximately 50% expectation provided in January 2023,” the filing stated. “Higher capacity in the quarter is contributing to better top line revenue performance as the Company's operational reliability continues to lead the industry. Due to better completion rates, first quarter 2023 capacity is now expected to be up around 23% versus first quarter 2022, three points higher than the Company's previous expectations.”
While demand is reported to be above 2019 levels thus far in 2023, both January and February were cited as “lower-demand months”,” prompting a reduced total revenue per available seat mile growth forecast to between 22% to 23% year over year, down from a previous projection of 25% growth. Fuel price guidance is now expected to be above the previous guidance of $3.19 per gallon. The carrier now sees Q1 fuel costs ranging from $3.31 to $3.41.
Full-year EPS are still expected to range from $10 to $12, well above the $8.60 analyst consensus. The airline explained that trends are expected to accelerate through the summer into late 2023.
Shares of United Airlines ( UAL ) fell as much as 8% in Monday’s extended session, adding to an over 4% drop during Monday’s trading.
Read more on Monday’s trading trends for the broader airline sector .
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United Airlines stock slips on pessimistic Q1 forecast