United Airlines' 1Q24 Unit Revenue Outlook Better Than Delta Air: Analyst's Eyes On Building Blocks For 2024 EPS

BofA Securities analyst Andrew G. Didora reiterated a Buy rating on United Airlines Holdings, Inc. UAL, with a price objective of $56.

United Airlines reported fourth-quarter earnings per share of $2.00, versus a $1.70 estimate, and revenue of $13.60 billion, versus $13.54 billion.

The first quarter of 2024 unit revenue outlook of flat (or slightly down ex an accounting change) is better than expectations of down around -2% and is better than Delta Air Lines, Inc.’s DAL flat to -3% outlook, the analyst notes.

Per Didora, this likely continues the company’s unit revenue outperformance vs the industry despite what will be greater than industry capacity growth even after adjusting for Boeing Company‘s BA 737 MAX 9 grounding. 

Per the analyst, management needs to give investors some confidence in the building blocks to the $9-$11 in 2024 EPS.

An accounting change that shifted certain commission costs from a contra-revenue to a distribution cost increased 4Q23 unit revenues/costs by 0.6%/1.0% and will continue from 1Q24-3Q24, the analyst adds.

For guidance purposes, UAL assumes MAX 9 is out of service through the end of January, driving a 3pt headwind to unit costs and resulting in unit cost growth in the mid-single digits, according to Didora.

Price Action: UAL shares are trading higher by 6.19% to $40.83 on the last check Tuesday.

Photo via Wikimedia Commons