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United drops on slashed outlook, analyst reactions mixed; Delta reaffirms guidance
© Reuters. United (UAL) drops on slashed outlook, analyst reactions mixed; Delta reaffirms guidance
By Senad Karaahmetovic
Shares of United Airlines (NASDAQ:UAL) are down nearly 5% in pre-market Tuesday after the airline cut its Q1 outlook and now expects to post a loss for the quarter.
The carrier now expects to report an adjusted loss per share of $0.60-1.00, a significant negative revision relative to the prior outlook that called for a profit of $0.50-1.00. Analysts were expecting a profit per share of $0.63.
The operating revenue and capacity are now seen rising 51% and 23% year-over-year, respectively, up from the prior outlook for operating revenue and capacity growth of 50% and 20%.
“The Company has determined that it is appropriate to accrue expense in the first quarter 2023 related to a potential new collective bargaining agreement with employees represented by the Air Line Pilots Association. This accrual represents a shift in the timing of the associated expense from the second quarter 2023 into the first quarter 2023,” UAL said in a press release.
United reaffirmed a full-year forecast for adjusted EPS in the range of $10-12.
“The Company continues to see a strong demand environment,” United added.
BofA analysts said the update is not what the market was expecting.
“Based on resilient bookings and jet fuel coming down since late January, most investors had expected a top line beat and better fuel costs… Reiterate Underperform.”
Citi analysts are more positive as he believes the full-year outlook remains solid.
“In spite of 1Q’s bumpier outlook, Buy-rated United otherwise reiterated all other aspects of its 2023 guide. Citi would treat any big stock price dips in United on Tuesday morning as long-term buying opportunities,” they wrote in a note.
Elsewhere, Delta Air Lines (NYSE:DAL) reaffirmed its adjusted EPS forecast for the first quarter. It still sees adjusted EPS in the region of $0.15-0.40 on revenue of $11.8-12.1B.
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