United Airlines expects to quadruple profit in 2023

UNITED Airlines Holdings on Tuesday forecast at least a four-fold jump in full-year profit for this year and reported fourth-quarter earnings that topped Wall Street estimates on robust travel demand, sending its shares higher.

The Chicago-based carrier sees an adjusted profit of US$10 to US$12 per share for 2023, up from US$2.52 per share last year. That is well above analysts’ estimates of US$6.54 a share, according to a Refinitiv survey.

United shares rose 4 per cent to US$53.22 in extended trading.

US carriers are enjoying the strongest travel demand since the start of the Covid-19 pandemic, boosted by reopening of closed borders, a strong US dollar and rising corporate travel.

While recession fears have sparked concerns about consumer spending, airlines say travel demand remains strong and exceeds the pace of flight capacity growth, keeping ticket prices high.

It posted a fourth-quarter profit of US$2.46 per share exceeded analysts’ expectations for US$2.10, according to Refinitiv data.

Rival Delta Air Lines last week said the industry is expected to see tens of billions of dollars of incremental demand in the next few years as the relationship between passenger revenue and global gross domestic product returns to pre-pandemic trend.

Before the pandemic, passenger revenue accounted for 1 per cent of the global GDP.

Staffing and aircraft shortages across the industry are expected to limit capacity growth, underpinning the pricing power carriers are currently enjoying.

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The company expects total revenue per available seat mile, a proxy for pricing power, to be up 25 per cent from a year ago in the current quarter.

It forecast a 50 per cent year-on-year jump in operating revenue in the first quarter, translating into a profit of 50 cents to US$1 per share. Analysts are estimating a profit of 25 cents a share for the quarter.

United will discuss the results on a call with analysts and investors on Wednesday morning. REUTERS