Why United Airlines Shares Are Plunging Today

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  • United Airlines Holdings (NASDAQ:UAL) shares have been falling since the company filed 8-K with SECProviding an update on our 1Q23 guidance.

  • UAL reduced its adjusted EPS outlook to $(0.60)-$(1.00) prior guidance Adjusted pre-tax margin of (2%)-(4%) compared to the consensus estimate of $0.50-$1.00 vs $0.68, and compared to the prior ~3%.

  • It now sees capacity (vs 2022) at ~23% (previously ~20%) and expects total operating revenue to grow by ~51% (previously 50%).

  • Total Revenue Per Available Seat Mile (TRASM) 22%-23% ex ~25%. Flat -1% ex (3%) – (4%) of adjusted cost or operating expenses per available seat mile (CASM-ex).

  • UAL expects an average jet fuel price of $3.31-$3.41 per gallon, up from $3.19 earlier.

  • The company continues to expect adjusted pre-tax margin of ~9% in FY23 and adjusted EPS of $10 to $12 against the consensus estimate of $8.7.

  • United said it has decided it is appropriate to incur costs related to possible new collective bargaining with employees represented by the Air Line Pilots Association in the first quarter of 2023.

  • Price Action: Shares of UAL are trading down 2.89% on Tuesday at $47.42 premarket.

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