United Airlines (UAL) on Monday reported first-quarter earnings and sales after the close that missed expectations, but the air carrier said it saw a “clear path to profitability” as travel demand picks back up following coronavirus lockdowns last year.
UAL stock and other airline stocks fell after hours. The carrier reported the results as the airline industry tries to map out the post-pandemic landscape. United’s earnings conference call takes place Tuesday.
United Airlines Earnings
United lost $7.50 a share during the first quarter. That was worse than Wall Street forecasts to lose $6.97 per share. Revenue of $3.22 billion came up shy of expectations for $3.25 billion.
Average core cash burn of $9 million per day marked an improvement of about $10 million per day in Q4. United’s cash flow turned positive in March.
Delta, as well, saw positive cash flow last month. American Airlines (AAL) also said an adjusted measure of its cash flow turned positive in March.
“We’ve shifted our focus to the next milestone on the horizon and now see a clear path to profitability,” United CEO Scott Kirby said in a statement.
“We’re encouraged by the strong evidence of pent-up demand for air travel and our continued ability to nimbly match it, which is why we’re as confident as ever that we’ll hit our goal to exceed 2019 adjusted EBITDA margins in 2023, if not sooner,” he continued.
United on Monday also said that in July it will offer new flights to Croatia, Greece and Iceland. By focusing more on key travel markets, such as those where vaccinated travelers are welcome, United expects to return to positive net income even if business and long-haul international demand only returns to about 35% below 2019 levels.
United said it sees second-quarter total revenue per available seat mile down 20% compared to 2019 levels and capacity down around 45% vs. 2019.
UAL stock has a 49 Composite Rating. Its EPS Rating is a weak 9, after the coronavirus pandemic halted a large portion of travel, causing the airline industry to lose money.
Other airline stocks also slipped. Delta stock lost 0.4%, and was just below its 50-day line.
Airline Stocks And Leisure Travel
With vaccinations increasing, airlines are bracing for a rush in pent-up travel demand, even as U.S. coronavirus cases still rise. Deutsche Bank analysts, in February, said the industry was “back on track” after many potential travelers saved money during lockdown.
“Thanks in part to government stimulus checks, Americans have money to spend, and it is going to things like restaurants and travel,” Cowen airline stocks analyst Helane Becker said in a research note on Friday.
However, she said that each airline is adding flights to the same areas.
“People are traveling to Florida and other coastal cities where they can go to the beach, as well as to national parks in the U.S.,” she said. “Americans are also traveling to Mexico, the Caribbean and other Latin American leisure destinations.”
United Looks To Europe
The new flights announced Monday, United said, would give travelers “more options for summer travel by flying direct to countries that are starting to reopen to vaccinated visitors.” United allows passengers to upload their vaccine results via its app.
A World Health Organization emergency health committee said on Monday that it had recommended not to require proof of vaccination as a condition to travel internationally.
The committee, in making that recommendation, cited “the limited (although growing) evidence about the performance of vaccines in reducing transmission and the persistent inequity in the global vaccine distribution.”
Delta, in reporting earnings last week, said they were hoping to open flight routes between the U.S. and the UK in the summer. Management said Continental Europe was unlikely to be opened “in any meaningful way” until later in the year. Asia, it said, could take longer to reopen.
Still, Delta’s executives, during its earnings call with airline stocks analysts, fielded a question about whether it, like other parts of the travel industry, was experiencing understaffing as demand picks up.
CEO Ed Bastian said it wasn’t, even as hotels and car rental companies deal with those bottlenecks. But he said the biggest constraints it faces are related to pilot training and maintenance.
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