United Airlines Reports Strong Q3 Earnings, Expects Weaker Q4 Profit
United Airlines Reports Strong Q3 Earnings Amid Higher Costs
United Airlines Holdings announced better-than-expected third-quarter earnings but anticipates weaker profits in the current quarter due to increased costs. The Chicago-based carrier forecasts an adjusted profit of $1.50-$1.80 per share for the December quarter, falling below analysts’ expectations of $2.06 per share. This projection also represents a decrease from the $2.46 per share reported in the same period last year.
Strong Third-Quarter Performance and Softening Domestic Travel Demand
In the third quarter, United Airlines achieved an adjusted profit of $3.65 per share, surpassing Wall Street analysts’ estimated $3.35 per share. However, signs of declining domestic travel demand have raised concerns about consumers reducing travel spending as household savings dwindle and interest rates remain high.
Delta Air Lines Remains Optimistic About Travel Demand
Rival Delta Air Lines recently stated that the travel boom is not over. United Airlines’ earnings report supports this view, as the carrier experienced a 15% surge in passenger revenue during the third quarter compared to the previous year, driven by robust demand for international travel.
Encouraging Signs of Business Travel Rebound
United Airlines also observed a rise in bookings for trips scheduled closer to the departure date in August and September, indicating a resurgence in lucrative business travel. This positive trend suggests a potential recovery in corporate travel.
Profit Pressures from Fuel Price Hikes and Reduced Capacity
However, the airline is facing challenges due to a significant increase in fuel prices since July, which has put pressure on profits. United Airlines has reported a fuel cost surge of over 20% since mid-July. Additionally, the suspension of flights to Israel has led to a reduction in capacity, further impacting non-fuel costs. These costs are projected to rise up to 5% in the December quarter compared to the previous year.
United Airlines will discuss its earnings results with analysts and investors during a call on Wednesday morning.