United Airlines reports Q3 profit jump but forecasts higher costs

UNITED Airlines’ third-quarter profits were up over 20 per cent from last year on “strong and steady” domestic demand and “record” international profits in some regions, the company reported on Tuesday.

But alongside the positive earnings results, the US airline giant warned its profits could be hit by higher fuel costs, and the prospect of a prolonged conflict in the Middle East.

United’s shares fell more than 4.4 per cent in after hours trading, as investors digested the results.

Net income was US$1.1 billion between July and September, up 20.7 per cent from the same period last year, when net income was US$942 million, the company announced in a filing.

“Our strategy to diversify our revenue streams, capitalize on growth opportunities and constantly innovate to enhance our products for our customers is paying off,” United Airlines CEO Scott Kirby said in a statement.

“We remain on track to hit our financial targets,” he added.

Total operating revenues were US$14.5 billion for the same period last year, up 12.5 per cent, while capacity was up 15.7 per cent, according to the filing.

Its adjusted earnings per share for the third quarter jumped to US$3.65, up sharply from US$2.81 for the same period in 2022.

“United experienced a strong and steady domestic demand environment in the quarter, with 9 per cent revenue growth year-over-year,” the company said.

SEE ALSO

Airlines agonise over safety risk of Israel flights

Boeing 737 MAX monthly deliveries fall to the lowest level since 2021

Singapore lags as Asia-Pacific travel in year-end peak period shows uneven recovery

United orders 110 new planes from Boeing, Airbus

United Airlines to give conditional job offers to active-duty military pilots

More

“In the international space, profits were at record highs in both the Atlantic and Pacific regions,” it added.

Alongside its earnings result, the company also issued updated projections for growth this year,with two possible scenarios depending on the length of the ongoing conflict between Israel and Hamas militants in Gaza.

It expects total revenues to rise 10.5 per cent year-on-year if flights to Tel Aviv remain suspended until the end of October, but only 9.0 per cent if they are cancelled through year-end.

United also predicted that average aircraft fuel costs would rise substantially in the fourth quarter, from US$2.95 to US$3.28 per gallon.

The rising fuel costs are expected to hit the companies profits, with adjusted earnings per share would fall sharply to between US$1.50 and US$1.80, well below the average estimate of US$2.06 in a survey by Yahoo Finance. AFP