Buoyed by rising airfare and strong demand, United Airlines reported an $843 million profit for the fourth quarter of 2022 and returned to profit for the full year of 2022.
United Airlines Reports Sizable 2022 Q4 Profit, Surpassing 2019 Numbers Despite Lower Capacity
Airlines continue to use 2019 (the last full pre-pandemic travel year) as a reference and United greatly exceeded its 2019 numbers in 2022, reporting an $843 million profit for the fourth quarter on revenue of $12.4 billion, representing a 31% increase compared with 2019, 51% compared with 2022, and a record margin of 11.4%.
The future also looks bright for United. For the first three months of 2023, United expects revenue to be 50% higher than the same period in 2022. This comes as United plans to expand mainline flying by 20% compared to a year ago. Even with the increased capacity, United expects first quarter earnings in 2023 to land somewhere between $0.50 and $1.00, which handily would beat Wall Street expectations of $0.25.
Overall, revenue per available seat mile (RASM) is not expected to rise much in 2023, reflecting United does see a limit for the growth of airfare (and new labor contracts may also weigh down this number). RASM is calculated by dividing operating income by available seat miles (ASM), which is how many seat miles are actually available for purchase on an airline. Generally, a higher RASM translates to high profits.
For the full year of 2022, United reported net income of $737 million (adjusted net income of $831 million).
In an investor presentation uploaded ahead of a conference call today with CEO Scott Kirby and other C-Suite executives, United notes that three items will continue to restrict industry capacity in 2023:
- Staffing issues
- Plane shortages
- Outdated technology
Live and Let’s Fly will be listening to the investor call this morning and we will report if we hear any new nuggets of information from Messr. Kirby or other United leaders about tailwinds or headwinds facing United in 2023.
United Airlines reported a strong profit to close to 2022, recognizing what many of us have been seeing and experiencing anecdotally: planes are full and airfare is high. Now comes the next test. Aircraft delivery delays are abating and United will certainly grow massively in 2023. Will airfare keep up or will airfare finally soften?