United Airlines Reports Strong Q3 Results but Disappointing Q4 Guidance
Strong Q3 Results with Lower CASM
United Airlines (NASDAQ:) has reported its third-quarter results, surpassing analyst estimates. The company achieved an adjusted of $3.65 on revenue of $14.48 billion, exceeding expectations of $3.41 a share on revenue of $14.43 billion. Notably, the cost per available seat mile (CASM) for the third quarter decreased by 3.6% compared to the same period in 2019.
Challenges Ahead for Q4
However, United Airlines’ Q4 guidance fell short of estimates due to factors such as higher fuel costs and the suspension of Tel Aviv flights, which are expected to have a negative impact. The company forecasts Q4 earnings per share (EPS) of $1.80 or $1.50, assuming the suspension of Tel Aviv flights through year-end. This projection is below the estimated $2.13 EPS.
Analysts’ Assessment and Market Reaction
Analysts at Bernstein attribute the 5% drop in United Airlines Holdings shares in pre-market Wednesday trading to the worse-than-expected cost guidance for Q4. They highlight the significant impact of higher fuel costs on the decline and emphasize that this overshadows the positive performance United Airlines achieved during the summer months.
Positive Booking Trends and Outlook
Despite the challenges in Q4, United Airlines experienced strength in close-in bookings during August and September, with both months surpassing year-over-year demand. This positive trend indicates resilience and potential for recovery in the airline industry.
Overall, United Airlines’ Q3 results showcase its ability to outperform expectations, while the Q4 guidance highlights the ongoing obstacles faced by the company. As the airline sector continues to navigate through the COVID-19 pandemic and its associated challenges, it remains to be seen how United Airlines will adapt and respond to changing market dynamics.
