An earnings miss can’t keep United Airlines Holdings (NASDAQ:UAL) stock down today.
UAL is up more than 10% after the company issued its first quarter earnings report after the closing bell on Wednesday. Although it narrowly missed analysts’ predictions, investors piled into shares today on news that United Airlines expects to return to profitability in the second quarter of this year.
“The demand environment is the strongest it’s been in my 30 years in the industry – and United and its customers will benefit more than any other airline” CEO United Airlines CEO Scott Kirby said. “We’re now seeing clear evidence that the second quarter will be an historic inflection point for our business. It leaves me more optimistic than ever about United’s future.”
United posted revenue of $7.57 billion, which was less than analysts’ expectations of $7.68 billion. The adjusted loss per share came in at $4.24, while analysts had expected a loss of $4.22 per share.
But those concerns were cast aside by the company’s guidance. United said that it expects to see operating margin of about 10% in Q2, which would nearly be back to 2019 pre-pandemic levels. It also projected it would have the highest quarterly sales in UAL’s history.
United “appears to be recapturing cost increases in ticket prices and strong demand,” Cowen (NASDAQ:COWN) analyst Helane Becker said in a research note.
UAL also said it planned to operate 87% of its 2019 schedule in the second quarter as the Chicago-based airline continues to recover from the Covid-19 pandemic, which saw many flights shuttered. United said in a statement:
As the company’s Pratt & Whitney-powered Boeing 777 aircraft are expected to gradually return to service, the company will continue to add back capacity based on its ability to best serve customers and will take a long-term view of profitability by not sacrificing operational reliability
United and other carriers continue to face staffing shortfalls and other disruptions.
UAL stock is up 17% so far in 2022, although it’s still about 48% off its pre-pandemic levels. Other airline stocks are also having strong days, with American Airlines (NASDAQ:AAL) up nearly 4%, Southwest Airlines (NYSE:LUV) up 3.1%, Delta Air Lines (NYSE:DAL) up 3.5%, and JetBlue Airways (NASDAQ:JBLU) up 4%.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
