United Airlines (UAL) earnings release for the 1st quarter of their 2021 fiscal year
Category: Stock Market and United Airlines (UAL)
Date: 18 July 2021 Stock Price of United Airlines (UAL): $46.01 Market Capital of United Airlines (UAL): $14.9 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of United Airlines, a global airline company that has over 4900 flights departing flights on a daily basis to 358 different airports across 5 continents. The group reported revenues of $3.2 billion and a net loss of -$1.2 billion.
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- The United team has now spent a year facing down the most disruptive crisis our industry has ever faced and because of their skill and dedication to our customers, we're poised to emerge from this pandemic with a future that is brighter than ever - United Airlines CEO Scott Kirby"
About United Airlines
United's shared purpose is "Connecting People. Uniting the World." We are more focused than ever on our commitment to customers through a series of innovations and improvements designed to help build a great experience: Every customer. Every flight. Every day. Together, United Airlines and United Express operate approximately 4,900 flights a day to 358 airports across five continents. In 2018, United and United Express operated more than 1.7 million flights carrying more than 158 million customers. United is proud to have the world's most comprehensive route network, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. United operates 788 mainline aircraft and the airline's United Express carriers operate 560 regional aircraft. United is a founding member of Star Alliance, which provides service to 195 countries via 26 member airlines. For more information, visit united.com, follow @United on Twitter and Instagram or connect on Facebook. The common stock of United's parent, United Airlines Holdings, Inc., is traded on the Nasdaq under the symbol "UAL"
Overview of United Airlines' 1st quarter 2021 earnings
First-Quarter Financial Results
- Reported first-quarter 2021 net loss of $1.4 billion, adjusted net loss2 of $2.4 billion.
- Reported first-quarter total operating revenue of $3.2 billion, down 66% versus first-quarter 2019.
- Reported first-quarter operating expenses down 49% versus first-quarter 2019, down 34% excluding special charges.
- Reported first-quarter 2021 ending available liquidity3 of $21 billion.
- Reported first-quarter capacity down 54% versus first-quarter 2019.
- Reported first-quarter average core cash burn of $9 million per day, an improvement of about $10 million per day versus the fourth-quarter 2020.
United Airlines' management commentary on their 1st quarter 2021 earnings report
CHICAGO, April 19, 2021 /PRNewswire/ -- United Airlines (UAL) today announced first-quarter 2021 financial results. The company has its eyes on the future, making continued progress on its commitment to remove $2 billion in structural costs and investing in key customer programs that will position the airline to capitalize on the recovery of business travel and long-haul international demand.
"The United team has now spent a year facing down the most disruptive crisis our industry has ever faced and because of their skill and dedication to our customers, we're poised to emerge from this pandemic with a future that is brighter than ever," said United Airlines CEO Scott Kirby. "We've shifted our focus to the next milestone on the horizon and now see a clear path to profitability. 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."
"The United team has now spent a year facing down the most disruptive crisis our industry has ever faced and because of their skill and dedication to our customers, we're poised to emerge from this pandemic with a future that is brighter than ever," said United Airlines CEO Scott Kirby. "We've shifted our focus to the next milestone on the horizon and now see a clear path to profitability. 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."
Second-Quarter 2021 Outlook
- Based on current trends, the company expects second quarter 2021 Total Revenue Per Available Seat Mile (TRASM) to be down approximately 20% versus the second quarter 2019.
- Expects second quarter 2021 capacity to be down around 45% versus the second quarter 2019.
- Expects second quarter operating expenses excluding special charges4 to be down approximately 32% versus the second quarter 2019, with second quarter 2021 fuel price per gallon estimated to be approximately $1.83.
- Expects second quarter 2021 adjusted EBITDA margin5 of around (20%).
United Airlines (UAL) stock price chart over the last 5 years
The image below shows the stock price history of United Airlines (UAL) over the last 5 years. And its not been a good time for United Airlines stockholders with the stock decreasing by-2.7% over the last 5 years. But considering the losses suffered due to the Covid-19 a mere -2.7% decline in their stock price over the last 5 years doesn't look to bad.
The stock of United Airlines is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of United Airlines stock is still negative at this point in time.
The stock of United Airlines is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of United Airlines stock is still negative at this point in time.
United Airlines (UAL) vs Delta Airlines (DAL) vs Southwest Airlines (LUV) stock over time
The image below shows the stock price performance of United Airlines (UAL), Southwest Airlines (LUV) and Delta Airlines (DAL) over the last 5 years. The image shows the carnage in airline companies stock prices, especially since the start of 2020. Below the stock price return of the three aforementioned airlines over the last 5 years:
So the stock of Southwest Airlines have easily outperformed that of Delta and United Airlines over the last 5 years.
- Southwest Airlines (LUV): 34%
- United Airlines (UAL): -2.7%
- Delta Airlines (DAL): -9.2%
So the stock of Southwest Airlines have easily outperformed that of Delta and United Airlines over the last 5 years.
United Airlines (UAL) latest stock valuation
So what is United Airlines' stock worth based on the release of their latest earnings report and the fiscal guidance provided by United Airlines? Based on the latest earnings results, and their fiscal guidance our valuation models provide a target price (full value) price for United Airlines at $58.20 a United Airlines stock. We therefore believe that the stock is undervalued at its current price of $46.01
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $58.20. Therefore we see a good entry point into United Airlines stock at $52.40 or below. Since United Airlines is trading at below our suggested entry point into the stock we rate United Airlines as a buy, but this recommendation is only for the brave as the airline industry is still in for a very tough time in the next 18 to 24 months.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $58.20. Therefore we see a good entry point into United Airlines stock at $52.40 or below. Since United Airlines is trading at below our suggested entry point into the stock we rate United Airlines as a buy, but this recommendation is only for the brave as the airline industry is still in for a very tough time in the next 18 to 24 months.
Next earnings release of United Airlines (UAL)
It is expected that United Airlines will release their 1st quarter 2021 earnings release towards end July 2021