A United Airlines airplane soars through the skies of New York City, passing by iconic landmarks like the Empire State Building and One Vanderbilt, as it prepares to land at Newark Liberty International Airport in New Jersey. (Photo by Gary Hershorn | Corbis News | Getty Images)
United Airlines, one of the major players in the airline industry, has announced its record-breaking quarterly earnings. The company is also optimistic about the upcoming third quarter, thanks to the ongoing travel boom, particularly in international travel.
Despite facing some capacity challenges during the last quarter due to flight disruptions at its Newark hub, United Airlines exceeded analysts’ expectations with strong demand, resulting in higher-than-anticipated quarterly results and a rosy forecast.
As a result, the airline’s shares saw a 3% increase in extended trading after the announcement.
United’s positive outlook on travel demand aligns with the sentiments expressed by another major U.S. carrier, Delta Air Lines. American Airlines is also expected to report its earnings soon.
In order to capitalize on the surge in bookings following the global pandemic, United and other airlines have been expanding their international services. International flights now account for 40% of United’s total sales and are growing at a faster rate than domestic sales.
Here are the key highlights of United’s second quarter results compared to Wall Street estimates:
- Adjusted earnings per share: $5.03 vs. expected $4.03
- Total revenue: $14.18 billion vs. expected $13.91 billion
United reported a net income of $1.08 billion or $3.24 per share, a significant improvement from $329 million or $1 per share during the same period last year. Adjusted for exceptional items, including a pilot bonus as part of a new labor agreement, the company achieved an earning of $1.67 billion or $5.03 per share.
The reduced fuel bill, which was 26% lower than the previous year, played a major role in boosting United’s bottom line.
However, revenue per seat mile experienced a 0.4% decline compared to the previous year. While the capacity increased by 17.5% from the second quarter of 2022, it fell slightly short of United’s original plan due to the Newark disruptions.
United’s CEO, Scott Kirby, acknowledged the need to reduce flights at Newark Liberty International Airport as a result of severe thunderstorms that disrupted operations, causing thousands of flight cancellations and inconveniencing passengers and crew members. Kirby expressed confidence in the United team’s ability to overcome challenges and improve customer service.
Nevertheless, United is still optimistic about its future growth plans. The company anticipates a 16% increase in capacity during the third quarter, compared to the same period last year. Additionally, United expects revenue growth of up to 13% for the same period in 2022. The projected adjusted earnings per share for the third quarter range from $3.85 to $4.35, surpassing analysts’ estimates of $3.70 per share.
In other news, United recently reached a preliminary labor agreement with its pilots’ union, which includes significant raises over the next four years. This deal, estimated to be worth $10 billion by the union, aims to address the shortage of aviators and has yet to be ratified by United’s 16,000 pilots.
United’s executives will provide more insights during their call with analysts on Thursday, where they are expected to address both financial performance and labor negotiations.
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