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Earnings alert: UAL on the move - YouTube
Channel: CNBC Television
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we've got an earnings alert here on
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united airlines the stock is popping
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after hours despite posting a miss on
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the top and the bottom lines united says
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it expects to report a profit for the
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full year 2022 after a tough first
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quarter phil lebeau is back with a first
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on cnbc interview with united ceo scott
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kirby phil
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thank you melissa scott i don't know how
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else to say this but that's that's some
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serious guidance that you gave for the
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rest of this year i i don't want to
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focus too much on the first quarter i
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want to instead focus on the reason the
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stock is moving higher profitable second
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quarter and then the rest of this year i
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just looked at the before i came over
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here the analysts are expecting you guys
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to lose 230 i think
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what's changed yeah i've never seen uh
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really what's changed is demand i've
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never seen in my career and i've been in
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this industry a long time such a hockey
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stick increase in demand leisure demand
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but also business demand we actually
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expect business tr our business revenue
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uh book business revenue to be above
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2019 levels in just a few weeks and
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we're already booking more business
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revenue than we have capacity
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it's really amazing we know that it
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always goes up in the summertime spring
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and summer is the busy time but you guys
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expect this type of demand to go well
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beyond spring and summer how long does
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this last yeah look i think we're in the
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first inning this is really the turning
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point uh the inflection point for for
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coming out of covid as we transition
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from pandemic into endemic and this is
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the first quarter we still have a long
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way to go on the business travel
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recovery a ways to go on europe asia is
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basically not open yet and another way i
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think about this is we're back to 2019
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revenue levels and we're producing the
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kind of 10 operating margins this
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quarter but nominal gdp since 2019 has
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grown by 16 normally we would grow with
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nominal gdp that would sort of tell you
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if we just get back to the normal trends
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there's another 16 to go i mean it
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really is an amazing turnaround the
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skeptic would say look at airfares and
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that you guys are capturing that early
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pent-up demand and that with airfares at
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this level where you're making up the
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full increase in jet fuel costs
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you're not going to be able to keep it
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at these levels for this long the
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industry won't be able to keep them at
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these levels well look i think demand is
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going to continue to grow
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you know you look at business travel it
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really is it's on it you look at the
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charts that we have internally they're
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just heading up and to the right it's
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got a ways to go european travel you
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know it's really strong right now but we
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still have testing requirements there's
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going to be a step function increase
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when that happens asia demand is not
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there yet i mean really are we're still
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16 points behind sort of where we should
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be um and and fares have gone up
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compared to pandemic levels but they're
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still a great value and they're still
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you know probably back to kind of 2017
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18
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inflation inflation-adjusted levels
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still a great value still a great
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bargain to travel
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and i think demand is really just we're
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really just in the first inning of the
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real travel recovery scott melissa has a
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question for you melissa hey scott i was
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wondering how you think about uh what
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the trajectory of this looks like and
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whether or not there's a certain element
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to pull forward travel that is going on
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we talk about revenge spending a lot
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maybe there's some of that going on in
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in terms of travel and leisure and that
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spending
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won't be done later on or next year
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because it's being done now because it's
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the first time people can get out and go
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yeah
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well look i think it's still a to be
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determined question my own opinion is
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that that's not the case um and
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particularly we're still well behind
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trend relative to gdp from a macro level
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and so there's a long way to go i would
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also tell you that a year ago people
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were saying the exact same thing about
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domestic leisure travel it's all been
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put forward it's pent up demand
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and it's done nothing but accelerate
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since then really i think part of what
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happens here is particularly after what
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we all went through in the pandemic you
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know the value of experience the
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recognition of going on a business trip
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and meeting with a client going on a you
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know a business conference and and
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networking i think people appreciate it
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even more i think there's going to be at
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least as much demand as there was before
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and arguably more
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i certainly am traveling more and expect
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to do that you know forever and i think
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there are a lot of people out there who
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are going to travel even more than they
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did before the pandemic started
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and will you be more judicious in terms
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of your capacity i know you're already
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being judicious in the second quarter
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does that continue for the remainder of
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this year yeah look there are a lot of
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challenges uh around the industry in
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terms of being able to support the
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flying you see a lot of airlines
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actually having meltdowns you know at
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united we're fortunate we've hired six
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thousand people we don't really have a
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challenge hiring people we have great
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careers but there's all the other
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infrastructure challenges and because of
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that we're taking our time bringing
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capacity back our number one objective
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is to make sure that we focus on the
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long-term for customers and operate
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reliably i'm proud that you know so far
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this month we're number one in on-time
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performance of all airlines in the
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country we're number one in completion
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factor and our team is doing a great job
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but we're not going to let the
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possibility of short-term profits you
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know put the customer experience at risk
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and we're prioritizing operational
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reliability so we're going to keep
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gradually adding back capacity
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and making sure that we can do so and do
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so reliably scott kirby ceo of united
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airlines on a huge day with yeah the top
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and the bottom for the first quarter
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they they were amiss but that's not why
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the stock is moving higher and by the
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way melissa just so you know ceos do
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have friendly wagers with their cfos
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scott was telling me he told the cfo i
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bet you we topped 50 after this earnings
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report cfo said oh no no no no no
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i'm smiling you weren't supposed to tell
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him
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what did he win phil
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what did you win 20 bucks and pride
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yeah okay not bad 20 bucks in pride 507
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is where the stock is now thank you phil
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and thank you scott as well we've only
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begun to scratch the surface of airline
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earnings so be sure to tune in to cnbc
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tomorrow at 7 30 a.m eastern time for an
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interview with american airlines ceo
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robert eisen and at 1 pm to hear the ceo
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of alaska airlines let's trade united
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here tim
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big big guide here
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not big guide i mean this is massive the
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fact that you're talking about also long
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haul and and international increasing
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rapidly business travel increasing
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rapidly he mentioned that that actually
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capacity is down 20 from a year and yet
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trasm so total revenue per available
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seat mile is up almost 17
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airlines are more efficient and more
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profitable today now that's the real key
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watch airlines because often they've
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disappointed investors and that's what
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investors watch in the space is how
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efficient they can be but right now
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at 52 bucks on the chart he should get
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an even bigger price because that's
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really where you've broken a one year
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downtrend for this company and i i think
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this is a very important day um
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profitability and and return to the
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front of the bus yeah
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return to business travel has just begun
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guy i mean i know that you
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like to stay home
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you haven't been here at the nasdaq at
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least for a while
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but what do you what do you make of that
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because if that is the case that we're
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just on the cusp of the return of
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business travel there's a lot more to
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come in in terms of demand for airline
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tickets
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i could take one of those united planes
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from morristown into the city i'd be
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there every day
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it's a it's a remarkable guide and for
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context pre-covered united was a 92
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stock today it's a better run company to
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tim's point far more efficient i get
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fuel costs okay but that's in the stock
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right now i'm not saying it's going back
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to 90 but this should be
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mid 60s and we made the same case for
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delta a couple days ago the airlines to
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me still have a lot of room to the
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upside what is the read through to the
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reopen trade
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well i thought your question was a good
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one i think there is some pull forward
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doesn't need to be all or none but one
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thing though i want to point out
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comparing the stock to 90 i look at the
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enterprise value the enterprise value is
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all the way back to the high right when
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you include that debt that they had to
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take so maybe it should be maybe to
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tim's point they're a better run airline
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now if they have capacity constrained
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meaning that they'll get much better
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pricing i can see how it makes sense i
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don't own them though
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i'll just say this acknowledgement of
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that bet almost ensures that the stock
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closed below
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i'm just telling you that flat out we'll
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check it tomorrow the cfo so it's really
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fine they both win
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50-25 so it looks like scott kirby is
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the winner still
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you
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