United Airlines reaps $942 million profit on strong summer
By DAVID KOENIG | AP Airlines Writer
United Airlines earned $942 million in the third quarter as vacationers paid higher fares and packed planes over the summer, and the airline offered an upbeat forecast of late-year earnings.
United's CEO said Tuesday that concern about inflation and the economy does not seem to be discouraging people from buying airline tickets. He said that is partly because people who work part of the week from home have more flexibility to take short trips.
The Chicago-based airline said adjusted earnings were $2.81 per share, compared with a forecast of $2.28 among analysts in a FactSet survey.
United forecast that fourth-quarter earnings will be between $2 and $2.25 per share, well above a FactSet forecast of 98 cents per share.
Third-quarter revenue rose to $12.88 billion, topping analysts’ target of $12.74 billion.
The airline's shares rose 7% in extended trading after the results and fourth-quarter outlook were released.
U.S. air travel has bounced back from the onset of the pandemic. Nearly 2.5 million travelers went through airport security checkpoints on Sunday, the biggest travel day since February 2020, according to Transportation Security Administration figures. Fares are higher than they were before the pandemic, resulting in airline revenue exceeding 2019 levels on a per-mile basis.
CEO Scott Kirby said he is optimistic United will see strong financial results in the fourth quarter and beyond despite growing concern about an economic slowdown. He credited a change in travel habits, particularly among office workers who can now work from home at least part of the week.
“When you were tethered to your desk and had to be there Monday through Friday, 9 to 5, you couldn't get away for a weekend,” Kirby said during an event at The Washington Post. “Now you can leave on Wednesday or Thursday or come back on Monday, Tuesday or Wednesday and work remotely for one or two days.”
As a result, he said, midweek flights grew notably more crowded in September.
The United report came a week after Delta Air Lines posted a $695 million third-quarter profit and also gave a rosy forecast for the holidays and the fourth quarter.
Delta CEO Ed Bastian said at the time that the airline industry is enjoying a “countercyclical” recovery because consumers still have money, and they are spending more on services and less on goods.
Delta executives said bookings by business customers — a key, lucrative group for airlines — picked up after Labor Day, and they are confident corporate travel will fully recover, even with Zoom calls replacing some in-person meetings.
Businesses cut travel budgets sharply when the pandemic hit. Most have eased some restrictions on employee travel. Still, there is enough concern about long-term trends — including pressure to reduce flying to limit climate-changing emissions — that the U.S. Travel Association is pushing tax breaks to encourage business-travel spending.
Like business trips, international travel also has lagged the overall recovery, but United felt confident enough about 2023 to announce last week that it will increase transatlantic flights next summer.
While airlines are seeing a surge in revenue, they also face higher costs. The price of jet fuel is far above pre-pandemic levels, and pilots and other employees are pushing for higher pay in the largely unionized industry.
“Inflationary cost pressures are not going away,” Cowen analyst Helane Becker said in a note to clients. “Salaries are going up through hourly pay increases and bonuses, and once that genie is out of the bottle, it’s hard to put it back in.”
Executives of United Airlines Holdings Inc. are scheduled to discuss the quarter and their outlook on a call with analysts Wednesday.
American Airlines, which raised its third-quarter revenue forecast last week, is scheduled to issue results Thursday. Southwest will wrap up reports from the big four of the U.S. airline industry next week.
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