RBC : Flash reportConnecting The Dots: AC flash read-through – UAL Q4/22 results above expectations
Sentiment: Positive
Our take: We see the read-through for Air Canada as positive as continued strong demand has yet to be impacted by economic uncertainty and high pricing. Strong demand led to UAL's (not covered) Q4/22 report and 2023 outlook that came in mainly above consensus expectations. UAL reported Q4/22 EPS of $2.46, above expectations of $2.12 and more importantly, is expecting Q1/23 EPS of $0.50 – $1.00, significantly above consensus expectations of $0.40. That said, the airline cited capacity constraints slowing its recovery due to pilot shortages and late OEM deliveries, something we see AC as relatively insulated from given its training program with Chorus providing a steady stream of qualified pilots and preferential access to used aircraft.
What happened?
UAL announces Q4 results. United Airlines announced Q4/22 results this evening, with the key takeaways being:
1. NI of $843MM, adj. NI of $811 MM
2. Capacity down 9% compared to Q4/19
3. Total operating revenue of $12.4B, up 14% compared to Q4/19
4. TRASM of up 26% compared to Q4/19
5. CASM of up 21%, and CASM-ex1 of up 11%, compared to Q4/19
6. Operating margin of 11.1%, adjusted operating margin of 11.2%, both up 2% compared to Q4/19
7. Pre-tax margin of 9.1%, adj. pre-tax margin of 9.0%, both up and ~1% compared to Q4/19
8. Average fuel price per gallon of $3.54