Energy
Wednesday, October 18th, 2023 2:13 pm EDT
Key Points
- United Airlines anticipates a decline in profits for the last three months of the year due to the combination of higher jet fuel costs and the suspension of its Tel Aviv flights during the Israel-Hamas conflict. The airline has estimated adjusted earnings for the current quarter to be in the range of $1.50 to $1.80 per share, falling below analysts’ expectations of $2.06.
- United’s full-year adjusted earnings outlook has also been adjusted downward, with the company now expecting to earn between $9.55 and $9.85 per share, down from its earlier projection in July, which was in the range of $11 to $12 per share. Rising jet fuel prices, which have increased nearly 25% since the summer, have contributed to this revision.
- The suspension of flights to Israel is a contributing factor to the airline’s challenges, as United and other U.S. and international carriers discontinued their services during the Israel-Hamas conflict. United, in particular, had a significant presence in Israel, accounting for 2% of its capacity. The airline expects its fourth-quarter revenue to rise year-over-year by 9% if the Israel flight suspension continues through the end of the year or by 10.5% if the suspension only lasts through October. Additionally, United anticipates a 3.5% to 5% rise in costs (excluding fuel) in the fourth quarter compared to 2022, which is attributed to various factors, including increased labor costs, delayed aircraft deliveries, and air traffic controller shortages.
United Airlines has projected that higher jet fuel costs and the suspension of its Tel Aviv flights during the Israel-Hamas conflict will impact its profits in the last quarter of the year. The Chicago-based carrier estimates adjusted earnings for the current quarter to be between $1.50 and $1.80 per share, which falls short of analysts’ expectations of $2.06. Furthermore, United expects its adjusted earnings for the full year to be between $9.55 and $9.85 per share, down from its earlier forecast of $11 to $12 per share. This downward revision is attributed to rising jet fuel prices, which have increased by nearly 25% since the summer.
The airline’s shares were down more than 5% in premarket trading following this announcement. The decision to suspend flights to Israel also played a significant role in these projections, with United and other carriers discontinuing services during the conflict. United had a substantial presence in Israel, accounting for 2% of its capacity.
United anticipates a year-over-year revenue increase of 9% to 10.5% for the fourth quarter, depending on the duration of the Israel flight suspension. However, it also expects its costs, excluding fuel, to rise between 3.5% and 5% in the fourth quarter due to various factors, including higher labor costs, delays in aircraft deliveries, and air traffic controller shortages.
Despite a strong summer for air travel, especially in international destinations, United Airlines, along with other major carriers, now faces challenges due to higher operating costs and disruptions caused by the Israel-Hamas war. The airline reported third-quarter results that exceeded expectations, with net income of $1.14 billion and adjusted earnings per share of $3.65, along with total revenue of $14.48 billion.
United Airlines will address these concerns and discuss its fourth-quarter outlook during a call with analysts and media.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/17/united-airlines-ual-3q-2023-earnings-.html
