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United Continental (UAL) Beats on Q2 Earnings, Raises View
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United Continental Holdings, Inc. (UAL - Free Report) reported better-than-expected results in the second quarter of 2018. The company’s earnings (excluding 75 cents from non-recurring items) of $3.23 per share surpassed the Zacks Consensus Estimate of $3.07. The bottom line also increased 17% year over year owing to higher revenues.
Operating revenues came in at $10,777 million, which outpaced the Zacks Consensus Estimate of $10,702 million. Moreover, the top-line figure was up 7.7% year over year.
Passenger revenues, which increased 8% highlighting the strong demand for air travel, accounted for bulk (91.7%) of the top line. Cargo revenues rose 15% and accounted for 2.9% of the top line. The balance came from other operating revenues.
Operating Results
The company reported a 3% year-over-year rise in consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) to 13.97 cents. Total revenue per available seat mile (cents) increased 2.8% to 15.24 cents. On a consolidated basis, average yield per revenue passenger mile inched up 1.5% from the year-ago quarter.
During the reported quarter, consolidated airline traffic — measured in revenue passenger miles — improved 6.4% year over year. Capacity (or available seat miles) rose 4.8%. Consolidated load factor (percentage of seat occupancy) was up 130 basis points to 84.8% as traffic growth outweighed capacity expansion. Average fuel price per gallon (on a consolidated basis) escalated 38.7% year over year to $2.26.
Total operating expenses rose 12.2% year over year to $9,616 million in the second quarter. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, third-party business expenses, profit sharing and special charges — declined 0.4% year over year.
Liquidity & Buybacks
United Continental generated $1,659 million as free cash flow (adjusted) at the end of the second quarter compared with $314 million in the prior-year quarter. Additionally, this Chicago-based carrier repurchased shares worth $407 million.
United Continental Holdings, Inc. Price, Consensus and EPS Surprise
In a bid to improve the flying experience of its passengers, United Continental is continuously taking initiatives to modernize its fleet. Apart from adding new and more efficient planes, the company is retiring old ones. To this end, the carrier recently announced plans to buy 25 new Embraer E-175 and four new Boeing 787-9 planes. The new planes are equipped with all-modern facilities, have additional seating capacity besides being fuel-efficient.
While the Embraer E-175 jets are expected to be delivered next year, delivery of the Boeing 787-9 planes is anticipated in 2020. Notably, United Continental aims to replace 25 CRJ-700 planes with the new Embraer E-175 jets.
Q3 Outlook
The company anticipates capacity to expand between 4.5% and 5.5% while pre-tax margin (adjusted) is estimated to lie between 8% and 10%. Passenger unit revenues are anticipated to increase 4-6% year over year. Additionally, United Continental predicts consolidated cost per available seat mile (CASM) — excluding third-party business expenses, fuel & profit sharing — to either remain flat or decline up to 1% year over year.
Meanwhile, consolidated average aircraft fuel price per gallon is anticipated between $2.27 and $2.32. Effective income tax rate for the quarter is likely to be in the 20-21% band.
Full-Year Outlook Tweaked
For 2018, capacity is estimated to expand in the 4.5-5% range compared with 4.5-5.5% projected earlier. The trimming of the full-year capacity growth forecast is a positive. CASM is anticipated in the range of down 1% to flat year over year. Effective income tax rate is anticipated to be 20-21% in the year. Adjusted capital expenditures are projected between $3.6 billion and $3.8 billion.
United Continental expects adjusted earnings per share to lie in the band of $7.25-$8.75 for the full year. Earlier, the metric was predicted between $7 and $8.50. The Zacks Consensus Estimate for current-year earnings is pegged at $7.70.
Notably, the company’s second-quarter outperformance along with the decisions to reduce its 2018 capacity growth guidance and improved earnings projection pleased investors. As a result, shares of United Continental were up almost 4% in after-hours trading on Jul 17.
Upcoming Releases
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter earnings reports from key players like JetBlue Airways Corporation (JBLU - Free Report) , Allegiant Travel Company (ALGT - Free Report) and SkyWest, Inc. (SKYW - Free Report) in the coming days. WhileJetBlue is scheduled to report on Jul 24, Allegiant and SkyWest are scheduled to follow suit on Jul 25 and Jul 26, respectively.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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United Continental (UAL) Beats on Q2 Earnings, Raises View
United Continental Holdings, Inc. (UAL - Free Report) reported better-than-expected results in the second quarter of 2018. The company’s earnings (excluding 75 cents from non-recurring items) of $3.23 per share surpassed the Zacks Consensus Estimate of $3.07. The bottom line also increased 17% year over year owing to higher revenues.
Operating revenues came in at $10,777 million, which outpaced the Zacks Consensus Estimate of $10,702 million. Moreover, the top-line figure was up 7.7% year over year.
Passenger revenues, which increased 8% highlighting the strong demand for air travel, accounted for bulk (91.7%) of the top line. Cargo revenues rose 15% and accounted for 2.9% of the top line. The balance came from other operating revenues.
Operating Results
The company reported a 3% year-over-year rise in consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) to 13.97 cents. Total revenue per available seat mile (cents) increased 2.8% to 15.24 cents. On a consolidated basis, average yield per revenue passenger mile inched up 1.5% from the year-ago quarter.
During the reported quarter, consolidated airline traffic — measured in revenue passenger miles — improved 6.4% year over year. Capacity (or available seat miles) rose 4.8%. Consolidated load factor (percentage of seat occupancy) was up 130 basis points to 84.8% as traffic growth outweighed capacity expansion. Average fuel price per gallon (on a consolidated basis) escalated 38.7% year over year to $2.26.
Total operating expenses rose 12.2% year over year to $9,616 million in the second quarter. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, third-party business expenses, profit sharing and special charges — declined 0.4% year over year.
Liquidity & Buybacks
United Continental generated $1,659 million as free cash flow (adjusted) at the end of the second quarter compared with $314 million in the prior-year quarter. Additionally, this Chicago-based carrier repurchased shares worth $407 million.
United Continental Holdings, Inc. Price, Consensus and EPS Surprise
United Continental Holdings, Inc. Price, Consensus and EPS Surprise | United Continental Holdings, Inc. Quote
Fleet Update
In a bid to improve the flying experience of its passengers, United Continental is continuously taking initiatives to modernize its fleet. Apart from adding new and more efficient planes, the company is retiring old ones. To this end, the carrier recently announced plans to buy 25 new Embraer E-175 and four new Boeing 787-9 planes. The new planes are equipped with all-modern facilities, have additional seating capacity besides being fuel-efficient.
While the Embraer E-175 jets are expected to be delivered next year, delivery of the Boeing 787-9 planes is anticipated in 2020. Notably, United Continental aims to replace 25 CRJ-700 planes with the new Embraer E-175 jets.
Q3 Outlook
The company anticipates capacity to expand between 4.5% and 5.5% while pre-tax margin (adjusted) is estimated to lie between 8% and 10%. Passenger unit revenues are anticipated to increase 4-6% year over year. Additionally, United Continental predicts consolidated cost per available seat mile (CASM) — excluding third-party business expenses, fuel & profit sharing — to either remain flat or decline up to 1% year over year.
Meanwhile, consolidated average aircraft fuel price per gallon is anticipated between $2.27 and $2.32. Effective income tax rate for the quarter is likely to be in the 20-21% band.
Full-Year Outlook Tweaked
For 2018, capacity is estimated to expand in the 4.5-5% range compared with 4.5-5.5% projected earlier. The trimming of the full-year capacity growth forecast is a positive. CASM is anticipated in the range of down 1% to flat year over year. Effective income tax rate is anticipated to be 20-21% in the year. Adjusted capital expenditures are projected between $3.6 billion and $3.8 billion.
United Continental expects adjusted earnings per share to lie in the band of $7.25-$8.75 for the full year. Earlier, the metric was predicted between $7 and $8.50. The Zacks Consensus Estimate for current-year earnings is pegged at $7.70.
Notably, the company’s second-quarter outperformance along with the decisions to reduce its 2018 capacity growth guidance and improved earnings projection pleased investors. As a result, shares of United Continental were up almost 4% in after-hours trading on Jul 17.
Upcoming Releases
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter earnings reports from key players like JetBlue Airways Corporation (JBLU - Free Report) , Allegiant Travel Company (ALGT - Free Report) and SkyWest, Inc. (SKYW - Free Report) in the coming days. While JetBlue is scheduled to report on Jul 24, Allegiant and SkyWest are scheduled to follow suit on Jul 25 and Jul 26, respectively.
Zacks Rank
United Continental carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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