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United Airlines raises profit forecast, trims capacity expansion
[BENGALURU] United Airlines raised its profit forecast for 2018 on Tuesday, as average fares and traffic both rose and it trimmed capacity expansion in the face of soaring fuel costs.
Shares of United rose as much as 4.2 per cent in trading after the bell as the airline's second-quarter profit also topped analysts' estimates.
The third-largest US airline forecast adjusted profit for the full year at between US$7.25 and US$8.75 per share, up from its previous range of US$7.00 to US$8.50 per share.
Bigger rivals Delta Air Lines Inc and American Airlines Group Inc have both cut their full-year earnings forecasts in light of rising oil prices.
The Chicago-based carrier cut its plans for capacity growth for the year to a rate of between 4.5 per cent and 5 per cent, a company spokesman said. It had previously forecast a range of between 4.5 per cent and 5.5 per cent.
The company said net income fell to US$684 million, or US$2.48 per share, in the quarter ended June 30 from US$821 million, or US$2.67 per share, a year earlier, hit by an already-flagged US$105 million write-down of the value of its Brazil routes.
On an adjusted basis, the airline earned US$3.23 per share, beating analysts' estimates of US$3.07, according to Thomson Reuters.
Total operating revenue rose 7.7 per cent to US$10.78 billion, while average fares rose 1.5 per cent.
Fuel costs, which accounted for a quarter of United's total costs, surged 43.2 per cent, reflecting a steep rise in crude oil prices since early 2016.
United said it paid US$2.26 per gallon for aircraft fuel on average, up from US$1.63 a year earlier.
Shares of the airline have risen 7.7 per cent this year, compared with a 13.9 per cent fall in the S&P 500 Airlines index.