UPDATE – United Airlines expects that the strong recovery of air travel will overcome inflationary pressures to produce a very good final quarter of 2022, with the adjusted operating margin beating that of 2019 for the first time since the start of the pandemic. United released its Q3 results on October 18. United expects strong recovery to withstand headwinds.
After an already strong second quarter, third-quarter results have beaten expectations, with operating revenues, unit costs, and adjusted margins all higher than expected. Total operating revenues ended at $12.877 billion compared to $7.750 billion in Q3 2021. More importantly, they were up 13.2 percent over 2019.
Revenues were $11.653 billion from passengers (2021: $6.637 billion) and $498 million from cargo ($519 million), with other operating revenues up to $726 million ($594 million). Domestic revenues accounted for $7.057 billion and international for $4.596 billion. Total revenues per available seat mile (TRASM) were up 25.5 percent over 2019 to $0.1902. Corporate travel stabilized at eighty percent but has recovered quickly on Transatlantic routes.
Transatlantic travel was the strongest, with 22 percent more capacity and eighteen routes added to the network, ahead of Latin America. Asia/Pacific is still lagging behind. The consolidated load factor was 87.3 percent as United carried 38.8 million passengers, up from 32.1 million in Q3 last year.
Expenses were also up to $11.4 billion from $6.7 billion in 2021, largely caused by fuel. The fuel bill increased to $3.8 billion from $1.7 billion. Costs per available seat mile (CASM) were up 27.8 percent to $0.1687 or by 14.5 percent to $0.1122 excluding fuel.
Revenues minus expenses resulted in an operating profit of $1.458 billion ($1.037 billion), almost identical to that reported by Delta Airlines last week. The net profit for Q3 was $942 million versus $473 million in the same period last year. This is in sharp contrast with Delta Airlines which saw its net profit almost halved year on year.
Looking at the nine-months results, United ended the period with a $-106 million net loss compared to $-1.318 billion in 2021. The operating result was a positive $960 million versus a $-614 million loss, with total revenues of $32.6 billion compared to $16.4 billion. The carrier ended September with $20.4 billion in liquidity and $28.5 billion in long-term debt, having repaid $810 million during the quarter.
Outlook for Q4
In its outlook for Q4, United mentions three durable trends for air travel that will more than fully offset economic headwinds. The recovery of air travel from the pandemic is still continuing and demand for leisure travel is stimulated by hybrid work. Yes, there are still supply chain issues that will have an impact on the airline industry for years, but the first two trends are stronger. Despite a constrained labor market and outside disruptions causing cancelations, United’s on-time arrival performance in Q3 was the best of any third quarter while the completion rate was 99 percent in September.
The airline expects to operate at -9 to -10 percent capacity compared to 2019 in Q4, or -13 percent for the full year. TRASM should be up by 24-25 percent over 2019, and CASM ex-fuel by 11-12 percent. In December, United will have recovered 98 percent of the 2019 flight schedule, with only China missing as restrictions continue.
179 aircraft deliveries in 2023
United plans to take delivery of twenty Boeing MAX and four Boeing 787s during the final quarter, taking the number of MAX in the fleet to eighty and Dreamliners to 68. Including two more Airbus A320s, the fleet will grow to 867 aircraft for the mainline carrier and remain static at 510 for the regional airlines. Next year, it will take delivery of 179 aircraft.
United is expected to make a decision soon about the replacement of its aging Boeing 767s and 777-200s, reportedly buying around 100 widebodies. Although the airline has 45 Airbus A350-900s on order since 2017, some media have reported that United will cancel this order and opt for more 787s instead. United has brought back most of the Pratt & Whitney-powered 777-200s now, with a couple to be re-introduced in the coming months.
