United Airlines is set to divulge its first-quarter 2024 outcomes on April 16, following the market closure.
Marking an impressive history of outperforming expectations, UAL has surpassed the Zacks Consensus Estimate in the last four quarters, with an average beat of 17.84%.
Over the last 60 days, the Zacks Consensus Estimate for first-quarter 2024 earnings has experienced a downward revision of 31.7%.
Considering this scenario, let’s delve into the factors that might have influenced United Airlines’ performance in the upcoming quarter.
Anticipated high fuel costs are likely to have impacted UAL’s financial performance in the March quarter. Despite a decline from previous price peaks, oil prices remain stubbornly high. For the first quarter of 2024, the expected average fuel cost per gallon stands at $3.38, higher than the actual figure of $3.33 in the first quarter of 2023.
Moreover, UAL is grappling with non-fuel unit costs. The non-fuel unit cost, or cost per available seat mile (CASM: adjusted), is expected to rise in the mid-single digits from the levels of the first quarter of 2023. Escalating labor costs and constrained capacity are driving this increase. Our estimation predicts a 5.2% upsurge from the prior year.
Labor costs are likely elevated due to increased wages following the pilot contract ratified in 2023. We anticipate a 28% surge in salaries and associated costs in the first quarter of 2024 compared to actuals from the first quarter of 2023.
Full flights during the holiday season likely bolstered the top line in the review quarter. We anticipate a 9.4% hike in passenger revenues from the previous year.
The Predictive Model
Our reliable model doesn’t definitively foresee an earnings surprise for United Airlines this time. A positive Earnings ESP combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) usually raises the odds of an earnings beat. Unfortunately, this is not the case here. Explore the prime stocks to buy or sell before the earnings release using our Earnings ESP Filter.
United Airlines holds an Earnings ESP of -11.41% and a Zacks Rank #3.
Highlights of Q4
United Airlines’ earnings per share in the fourth quarter of 2023 (excluding 19 cents from non-recurring items) stood at $2, exceeding the Zacks Consensus Estimate of $1.61 but declining by 18.7% from the previous year.
Operating revenues of $13.63 billion surpassed the Zacks Consensus Estimate of $13.54 billion. The top line experienced a 9.9% uptick year over year due to strong air-travel demand, driven by a 10.9% surge in passenger revenues to $12.42 billion, constituting 91.1% of the total revenues. Nearly 41,779 passengers traveled on UAL flights in the fourth quarter.
Stocks Worth Considering
Here are some stocks from the broader Zacks Transportation sector that investors may find appealing, as our model suggests they have the potential to outperform in their first-quarter 2024 earnings.
Union Pacific Corporation boasts an Earnings ESP of +2.36% and Zacks Rank #3. The company is slated to announce its first-quarter 2024 earnings on April 25.
We anticipate that UNP’s cost-saving initiatives will enhance its first-quarter 2024 earnings. The Zacks Consensus Estimate for quarterly earnings has climbed by 0.8% to $2.53 per share over the last month. UNP has outperformed the Zacks Consensus Estimate for earnings in three of the last four quarters and missed once, with an average beat of 1.41%.
Expeditors International of Washington holds an Earnings ESP of +0.92% and Zacks Rank #3. The company is set to reveal its first-quarter 2024 earnings on May 7. Lackluster volumes in air-freight tonnage and ocean container regions, influenced by weaker demand and decreasing rates, might have impacted EXPD’s performance in the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter earnings witnessed a 3.54% downward revision over the last 60 days. EXPD managed to beat the Zacks Consensus Estimate for earnings in only one of the last four quarters and missed thrice, with an average miss of 3.37%.
Stay informed of upcoming earnings releases with the Zacks Earnings Calendar.
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