United Reports Fourth Quarter, Year-End Financial Results

DALLAS — United Airlines (UA) released its fourth-quarter and full-year 2023 financial results today. The numbers underscore a year of solid demand, diversified revenue, and increased capacity that helped it meet its targets and firmly set it as the world's largest airline by available seat miles (ASM).

Seat capacity for 4Q 2023 was up 14.7% over the same quarter in 2022. Top-line operating revenue for the same quarter also increased by 9.9% to $13.6 billion. Much of this was driven by improved sales for United's premium cabin (16% quarter-over-quarter) and Basic Economy (20% increase quarter-over-quarter). Additionally, UA had a net income of US$600 million and an adjusted net income of US$700 million. Diluted earnings per share (EPS) were $1.81, and adjusted diluted earnings were $2.00.

Outside of the numbers, the airline operated its busiest travel period ever during the December holiday season, flying 8.2 million passengers. Mainline UA also had its second-best quarter for on-time performance and the best for express and consolidated flying.

United Airlines N29985 Boeing 787-9 Dreamliner. Photo: Julian Schopfer/Airways

Full-Year Performance and Financial Results

2023 was a record-setting year for UA. The airline flew the most passengers and had the highest load factor—165 million and 86.4%, respectively. Regarding their finances, the Chicago-based carrier's net income for 2023 was US$2.6 billion, and its adjusted net was US$3.3 billion.

Pre-tax income was US$3.4 billion, adjusted to US$4.3 billion. Diluted EPS was US$7.89, and adjusted full-year diluted EPS was US$10.05. The latter met the target of US$10 to US$12 set at the beginning of 2023. Finally, the pre-tax margin reached 6.3%, adjusted to 8%.

Furthermore, the airline made note of some key events in 2023:

Announcement of mixed Boeing and Airbus aircraft order last fall
The first A321neo revenue flight, a plane that is experiencing the airline's highest customer survey results
Opening of five new United Club locations
A recent four-year contract with its pilots and a two-year contract with union-represented machinists
Most excellent seat capacity increases year-over-year
The most extensive International schedule among US carriers (30% larger than the next biggest airline)

By the numbers, United's 4Q results represent a beat of analyst expectations, and its stock was up in premarket trading. Still, it is not all good news in the reporting. It has been reported that the UA anticipates a loss in the first quarter of 2024 due to the grounding of the Boeing 737-9 MAX, as they are the largest operator of the aircraft type.

N27519 United Airlines Boeing 737-9 MAX KPDX PDX. Photo: Brandon Farris/Airways — N27519 United Airlines Boeing 737-9 MAX at PDX. Photo: Brandon Farris/Airways

Further Statements During the Earnings Call

During today's earnings call, UA spoke about the Boeing 737-10 order in light of the current grounding of the Boeing 737-9. While the airline is "not canceling its Boeing 737-10 order," CFO Mike Leskinen says UA is "taking it out of its internal plan" given that Boeing will most likely not meet its commitments this year. Due to the Boeing 737-9 grounding, its growth rate will slow down this year, the airline said.

The CFO further stated that UA would consider "alternative plans" to grow its fleet, mentioning the Airbus A350 widebody aircraft as a candidate for the early part of the next decade. UA did say it was still counting on Boeing and the 737-10 and that it was confident the American manufacturer would get its act together, adding its positive expectations for new Boeing 787 and 777 aircraft.

While UA had a strong domestic performance in 2023, it was mentioned that the carrier's Asian performance was weaker, even though its San Francisco-Asia connection was performing exceptionally well. Flying out of San Francisco International Airport (SFO) is currently limited due to the runway construction happening there, but overall, UA says it will be bullish on the Asian market.

Finally, the CFO was keen to mention that low-cost carriers (LCCs) have recently faced instability in their business. Conversely, it highlighted the growth in premium demand and stated that full-service airlines like itself, which generally have higher fares, have performed better. Mentioning that its loyalty program, MileagePlus, was its crowning jewel, Leskinen argued that higher margins have provided more stability, and this perspective has not been reflected in the valuation of UA stock on Wall Street, indicating that it is currently undervalued.

Featured Image: United Airlines N44501 Airbus A321neo at Phoenix Sky Harbor (PHX). Photo: Chris Goulet/Airways