United: Corp. Travel Took 'Significant Step Up' in January
Though still "well behind" where it should be relative to gross domestic product growth, corporate travel in the first few weeks of January took a "nice step up," United Airlines chief commercial officer Andrew Nocella said on a Tuesday...
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Though still "well behind" where it should be relative to gross domestic product growth, corporate travel in the first few weeks of January took a "nice step up," United Airlines chief commercial officer Andrew Nocella said on a Tuesday fourth-quarter earnings call.
"Quarter four was OK, it wasn't spectacular in any way," Nocella said. "But as we started January and the new budget season for all of our big-budget clients, we did notice a significant step up."
The carrier also is seeing close-in yield gains "as a result from that," and it's one of the reasons United's domestic revenue per available seat mile for the first quarter "is as strong as it is," Nocella added. "It's only been a few weeks, and I hesitate to say, 'Oh my gosh, it's fixed.' But the first few weeks of January we have gotten off to a really strong start, and it gives us increasing signs that this is going to be I think a very good year."
United's first-quarter outlook projects total revenue per available seat mile to be approximately flat year over year, "which is a nice sequential improvement versus the past few quarters," Nocella said. He credited ongoing strong domestic demand, business traffic volumes up year over year and "stronger pricing" so far in 2024.
The carrier, however, also is forecasting for the first quarter a per-share loss of between 35 cents to 85 cents, mainly due to the grounding of its Boeing Max 737-9 fleet of 79 planes since Jan. 6 following theAlaska Airlines door-plug incident on Jan. 5.
The planes represent about 8 percent of United's first-quarter capacity, United president Brett Hart said. In addition, because of the "close-in" cancellations, most of the expenses were fixed, and the carrier incurred additional interrupted trip expenses, United CFO Mike Leskinen said. For Q1, "we expect the combination of these items will increase CASM-ex by approximately 3 points," he said.
United CEO Scott Kirby clarified on the earnings call that United was not canceling its order Boeing 737 Max-10 orders, a few hours after a Tuesday CNBC interview that called them into question. Kirby on CNBC said Boeing already was five years behind on original deliveries, and United was working on an alternative plan that didn't have the Max-10s in it.
"We are taking it out of our internal plans," Kirby said. "We'll be working on what that means exactly with Boeing. But Boeing is not going to be able to meet their contractual deliveries on at least many of those airplanes. And I'll just leave it at that."
Kirby added that Boeing is "one of the best engineering, they're one of the best technology companies in history. … They're going through a rough patch right now, but I believe that Boeing across the board from top to bottom is committed to changing and fixing it. It is going to impact United in the near term, … but there are great people there, and they will get it together."
United Q4, Full-Year 2023 Metrics
United reported fourth-quarter revenue of $13.6 billion, a 9.9 percent increase year over year. Full-year 2023 revenue was up 19.5 percent over 2022 to $53.7 billion,
Passenger revenue for the fourth quarter was up 10.9 percent to $12.4 billion and increased 22.5 percent for the year to more than $49 billion. Domestic passenger revenue for the quarter was up 6.9 percent year over year to nearly $7.7 billion. International passenger revenue for the period was up 18 percent to more than $4.7 billion.
Net income for the fourth quarter was $600 million, a decline from $843 million a year prior. Full-year net income was more than $2.6 billion, more than 3.5 times the $737 million reported in 2022.
United served nearly 41.8 million passengers during the fourth quarter, up 9.2 percent year over year. For 2023, it reported nearly 165 million passengers, up 14.3 percent from 2022. Capacity for the quarter was up 14.7 percent versus Q4 2022, and for all of 2023 was up 17.5 percent year over year.
The average fuel cost was $3.13 per gallon for the quarter and $3.01 for the year.
