United Airlines planes at Denver International Airport.
Leslie Josephs | CNBC
United Airlines‘ second-quarter profit rose greater than 20% from last yr as strong demand for international travel boosted the carrier’s results, but its third-quarter forecast got here in shy of estimates as an oversupply of flights weighs on fares.
United said Wednesday that it expects to earn between $2.75 and $3.25 a share on an adjusted basis in the present quarter, lower than the $3.44 a share analysts polled by LSEG estimated.
Here’s what United reported for the second quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:
- Earnings per share:Â $4.14 adjusted vs. $3.93 expected
- Revenue:Â $14.99Â billion vs. $15.06 billion expected
United earned $1.32 billion, or $3.96 per share, within the three months ended June 30, up from $1.08 billion, or $3.24 per share, a yr earlier. Adjusting for one-time items, it reported earnings of $4.14 a share, compared with $3.93 that analysts expected.
Revenue of $14.99 billion jumped 5.7% from the year-earlier period, though it was just shy of estimates.
United reiterated its full-year forecast for adjusted earnings of $9 to $11 a share.
“Looking back on the quarter now, it’s increasingly clear that demand was the truth is strong, it just couldn’t sustain with the incremental industry domestic capability added in 2024. Excess capability, in turn, pressured yields,” United Chief Business Officer Andrew Nocella said in the course of the company’s earnings call.
United and Delta Air Lines, which also disenchanted with its third-quarter guidance, have still been standouts within the U.S. airline industry. Most carriers have been battling a rise in domestic capability that has weighed on airfares, despite the record demand.
Each carriers have added international flights, which have been in high demand after the pandemic, and premium offerings, like greater lounges and more spacious seats, capitalizing on travelers willing to pay more for a ticket.
United said on Wednesday that premium revenue grew greater than 8% from last yr, while sales from probably the most restrictive basic economy tickets rose 38%, as it really works to cater to each ends of the market.
The corporate expanded domestic flying by greater than 5% within the second quarter over last yr, and unit revenues fell greater than 1% over last yr. Yields on flights to and from Europe, which is a smaller slice of United’s sales, rose greater than 5%, compared with the second quarter of 2023.
United CEO Scott Kirby said airlines have been trimming their schedules and that there can be an inflection point to moderate the provision in mid-August.
“I have been through these cycles with capability over and over in my profession, that is the fastest respond and it is also the most important gap between the leading airlines and the opposite airlines, which I believe is a component of the rationale the response is so fast,” Kirby said Thursday in the course of the earnings call.
On Tuesday, Spirit Airlines cut its second-quarter forecast, citing weaker-than-expected revenue for fees like seating or luggage. Southwest Airlines and American Airlines, which report results on July 25, previously reduced their second-quarter estimates.
— CNBC’s Ece Yildirim contributed to this report.
