United Airlines [NASDAQ:UAL] today reported third-quarter 2023 financial results, showing the carrier had record setting profits in both Atlantic and Pacific regions.
Overall, United delivered a strong operational performance, with September being best on-time performance of the year to date.
A Strong Quarter at a Glance
In the third quarter of 2023, United Airlines reported a pre-tax income of $1.5 billion, a pre-tax margin of 10.3%, and diluted earnings per share of $3.42.
On an adjusted basis, their pre-tax income stood at $1.6 billion, with a pre-tax margin of 10.8% and diluted earnings per share of $3.65. These numbers reflect the airline’s robust financial health and strategic prowess.
Total third-quarter top-line revenue saw a substantial 12.5% increase year-over-year. This not only marks a record revenue quarter for United Airlines but also positions them at the upper echelons of their revenue guidance.
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Domestic Demand Soars
One of the key factors driving United’s success in the third quarter was the exceptional performance in their domestic market.
The company witnessed a remarkable 9% growth in revenue year-over-year, surpassing their second-quarter results.
The strength in close-in bookings during August and September played a pivotal role in this success, with both months exceeding year-over-year demand expectations.
International Profits
United Airlines didn’t limit its success to the domestic market. Profits in the Atlantic and Pacific regions soared to record highs.
In the Atlantic region, revenue surged by 15% compared to the same quarter in 2022, and an astonishing 70% compared to the same quarter in 2019.
Even though capacity remained 24% below the third quarter of 2019 in the Pacific region, revenue exceeded the levels from that period.
This international expansion has contributed significantly to United Airlines’ stellar performance.
Focus on Customer Choice
United Airlines has strategically focused on offering customers a range of choices when it comes to their level of service.
This strategy has paid off handsomely, particularly in the premium economy cabin, where revenue has consistently outpaced capacity growth since its introduction in 2019.
In the third quarter, revenue from premium products increased by 20% year-over-year, accounting for more than half of all passenger revenue.
The introduction of Basic Economy has also been a major success, with revenue for this product surging by 50% year-over-year in the same quarter.
MileagePlus® Loyalty Program
United Airlines’ award-winning airline loyalty program, MileagePlus®, continues to be a significant asset.
The third quarter witnessed a continued trend of new MileagePlus® member enrollments, setting a record for third-quarter enrollments and nearly doubling the number of new members compared to the same quarter just five years ago.
Spending across the U.S. card portfolio year-to-date saw double-digit growth over the first three quarters of 2022.
Moreover, this third quarter marked a historic milestone with more miles redeemed across the program for award travel than ever before.
The CEO’s Perspective
Scott Kirby, the CEO of United Airlines, expressed his gratitude to the company’s dedicated team, acknowledging their record-setting operational performance in August and September.
He highlighted the company’s strategy of diversifying revenue streams, capitalizing on growth opportunities, and innovating to enhance customer products, which has undoubtedly paid off.
The United Next strategy remains on track to achieve its financial targets.
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