United reported healthy fourth quarter earnings and an optimistic outlook on 2019, sending shares soaring in after hours trading.
Let’s do the numbers first. Feel free to skip over this portion if you want to find out what these numbers means.
- Fourth-quarter net income of $462 million, diluted earnings per share of $1.70, pre-tax earnings of $556 million and pre-tax margin of 5.3 percent.
- Fourth-quarter adjusted net income of $657 million, adjusted diluted earnings per share of $2.41 and adjusted pre-tax earnings of $814 million.
- Fourth-quarter adjusted pre-tax margin of 7.8%, expanding margin on an adjusted basis of 0.9 points versus the fourth-quarter of 2017.
- UAL recovered 98% percent of the year-over-year increase in fuel prices in 2018.
- Consolidated fourth-quarter passenger revenue per available seat mile (PRASM) increased 5% year-over-year, at the high end of the company’s fourth-quarter 2018 guidance range.
- Consolidated fourth-quarter unit cost per available seat mile (CASM) increased 7% year-over-year.
- Consolidated fourth-quarter CASM, excluding special charges, third-party business expenses, fuel and profit sharing, decreased 0.7% year-over-year.
- Employees earned $334 million in profit sharing for 2018.
What The Numbers Mean
In short, United had a very good year despite rising fuel prices. It managed to increase revenue and profit despite a 34.6% increase in fuel-related expenses. While fuel costs increased, United managed to drop its non-fuel union costs by 0.2%.
The case can be made that Scott Kirby’s expansion was ambitious, but successful. Operational performance was up and United can look back on the following accomplishments in 2018:
- Available seat miles up 4.9%
- 93 new routes
- 78 domestic
- 15 international
- 158,330,000 passengers flown (most ever)
- Personal Device Entertainment on all aircraft
- 3 new Polaris Lounges
- 42 aircraft retrofitted with Polaris Business Class
- Premium Plus (premium economy) launched
- 250,000 D:0 flights (most ever on-time departures)
- 1.7MN flights completed (best ever)
- Successful integration of Continental and United FAs into one contract
I try hard not be a United “fanboy” here and take take the same critical look at United as I do with all airlines. But speaking as a customer, I truly am a happy camper right now. No, the labor issues and Polaris cuts do not make me happy. But I experienced a great year on United as well. It was nice to have only one major delay the entire year and to enjoy some of the perks above like new lounges, new routes, and new onboard amenities. Let’s hope United does not let us down in 2019.