A Boeing 787-10 Dreamliner, from United Airlines, taking off from Barcelona airport in Barcelona on March 28, 2023.
JanValls | Nurphoto | Getty Images
United Airlines said dearer jet fuel and a halt to the carrier’s Tel Aviv flights in the course of the Israel-Hamas war will eat into its profits within the last three months of the yr.
For the present quarter, the Chicago-based carrier estimated adjusted earnings of between $1.50 and $1.80 a share, below analysts’ forecasts of $2.06.
United would then earn between $9.55 and $9.85 a share, on an adjusted basis, down from its forecast in July of between $11 and $12 a share, based on its projection for the fourth quarter. Jet fuel prices in major U.S. airports are up nearly 25% because the start of summer.
Its shares dropped around 4% in after-hours trading.
United and other U.S. and international carriers halted their flights to Israel earlier this month. United had more service to Israel than any of the U.S.-based airlines with service from Washington, D.C.; Newark, Latest Jersey; and San Francisco.
United said its fourth-quarter revenue will rise yr over yr between 9%, if Israel flights remain suspended through the tip of the yr, and 10.5% if the suspension lasts only through October. Its costs, excluding fuel, will likely rise between 3.5% and 5% within the fourth quarter from 2022, United said.
The service suspension comes after a strong summer for air travel with revenue growth for international destinations outpacing sales of domestic tickets. That has put big, global carriers resembling United and Delta on higher footing than some discount airlines resembling Spirit, which focus more on U.S. cities and expect losses.
Here’s what United reported for the third quarter compared with what Wall Street expected, based on average estimates compiled by LSEG, formerly referred to as Refinitiv:
- Adjusted earnings per share: $3.65 vs. an expected $3.35
- Total revenue: $14.48 billion vs. an expected $14.44 billion
United posted third-quarter net income of $1.14 billion, or $3.42 a share, versus $942 million, or $2.86 a share, a yr earlier. Adjusting for one-time items, United posted earnings per share of $3.65.
Revenue rose to $14.48 billion from $12.88 billion.
The carrier will hold a call with analysts and media on Wednesday at 10:30 a.m. ET, when it’ll face questions on fourth-quarter demand and the way the carrier plans to tamp down rising costs.
