United Airlines Holdings Inc (NASDAQ:UAL) reported third quarter financial results that exceeded Wall Street analysts’ expectations on strong domestic and international flight demand but a weaker-than-expected profit forecast for the fourth quarter sent its shares tumbling.
For the three months to September 30, 2023, the airline reported adjusted earnings per share (EPS) of $3.65, compared to the Street expectation of $3.40.
Revenue was $14.5 billion, ahead of the expected $14.44 billion, according to Zacks Investment Research.
This represents 12.5% year-over-year growth and marked a record revenue quarter, United highlighted.
The average price per fuel was $2.95 per gallon, in line with United’s revised fuel price guidance range of $2.95 to $3.05 per gallon.
It reported that its capacity was up 15.7% compared to the third quarter of 2022.
The airline also noted that total revenue from its premium products, such as premium economy tickets, increased 20% over the year-ago quarter and accounted for more than half of all passenger revenue.
"Our strategy to diversify our revenue streams, capitalize on growth opportunities and constantly innovate to enhance our products for our customers is paying off,” commented United CEO Scott Kirby.
However, the airline said higher fuel costs, estimated at $3.28 per gallon, and pausing its flights into Tel Aviv, Israel during the Israel-Hamas conflict will drag on its profits during the upcoming fourth quarter.
The airline expects to report 4Q adjusted EPS of $1.50 to $1.80 (depending on the length of the suspension of its flights to Tel Aviv), below the Street expectation per Zacks of $2.26.
Shares of United sank 4.3% to US$38.39 shortly following the release of its 3Q results.
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