The summer travel season was very good for U.S. airlines, but rising fuel prices are setting up a turbulent fourth quarter
ByThe Associated Press
October 17, 2023, 4:46 PM
United Airlines said Tuesday that it earned $1.14 billion in the vacation-heavy third quarter, but the airline forecast surprisingly weak profit the rest of the year due to surging jet fuel prices.
United said fourth-quarter adjusted profit would be between $1.50 and $1.80 per share, well below Wall Street expectations for $2.09 per share.
The third quarter, however, was strong all around for the Chicago-based airline. United said after the market closed Tuesday that revenue increased more than 12% over the same period last year, led by international flights.
United said it set quarterly profit records for service to both Europe and Asia, as more Americans traveled beyond U.S. borders. Domestic revenue also grew, though not as much.
United’s net income of $1.14 billion compared with $942 million a year earlier. The airline said earnings adjusted to exclude unusual items worked out to $3.65 per share, beating the Wall Street forecast of $3.38 per share, according to a FactSet survey of analysts.
Revenue rose to $14.48 billion, topping the analysts’ prediction of $14.43 billion.
United’s report comes after rival Delta Air Lines posted a $1.1 billion profit last week. Delta saw particular strength in sales of premium seats and international flights. It predicted that fourth-quarter revenue would rise as much 11% compared with a year ago.
Both airlines are seeing the cost of new labor contracts — particularly with pilots — weigh on their results. United agreed in July to raise pilot pay by up to 40% over four years in a deal that the Air Line Pilots Association valued at $10 billion over that span.
The price of jet fuel has also risen since mid-summer, although it remains cheaper than a year ago. Still, several airlines reduced their third-quarter profit forecasts in recent weeks as pump prices exceeded their expectations when the quarter began.
United declined to make officials available for comment on the results until Wednesday, when they hold a conference call with analysts and reporters.