United Airlines Sees Third-Quarter Profit Above Projections

After announcing higher-than-expected profitability for the third quarter due to a healthy comeback in travel demand, United Airlines on Tuesday forecasted a profit far beyond Wall Street projections for the current quarter.

During after-hours trading, the stock price rose to $39.73, a gain of roughly 7%.

According to Refinitiv statistics, the Chicago-based carrier’s adjusted earnings of $2.81 per share for the third quarter were above analysts’ estimates by 53 cents. The company hadn’t done that well since the third quarter of 2019 before the COVID-19 pandemic hit.

Adjusted earnings per share for the December quarter are expected to be between $2.00 and $2.25 for United; the company said, thanks to a 24% to 25% increase in total revenue per available seat mile compared to the same quarter in 2019.

According to Wall Street forecasts, that would be significantly higher than the 98 cents per share that investors are expecting for the fourth quarter.

The year 2019, before the pandemic, is being used as a comparison year by carriers.

United’s Chief Executive Officer Scott Kirby recently stated that the company is still optimistic about delivering solid financial performance in the fourth quarter of 2023 and beyond, despite rising concerns about an economic slowdown.

The business is still optimistic that it can achieve its 9% adjusted pre-tax margin objective by 2023, as it has in the past.

Despite mounting fears of an economic crisis, United’s optimistic outlook comes just days after competitor Delta Air Lines reported a stronger-than-expected profit in the fourth quarter on the assumption that an unquenchable desire for travel would drive up bookings.

Consumer demand for U.S. carriers is at a three-year high. Growth of the market for business travel is being driven by the return to normalcy in both the corporate and leisure sectors, as well as the reopening of borders that had been closed due to the COVID-19 pandemic.

These benefits United as it has a more significant share of the business and long-haul international travel sectors than its competitors.

United had a 40% increase in passenger revenue from Europe compared to the same time in 2019, with 21% of the company’s total passenger revenue coming from Europe.

The company is so confident in the demand that it plans to increase its transatlantic capacity by 30% next year compared to 2019.

On Wednesday morning, United will have a call with analysts and investors to go through the results.

Source: Reuters