United beats earnings expectations
United Continental Holdings Inc. said its profit is rising despite surging jet fuel costs.
The airline said efforts to gain market share -- by adding more flights and connecting more small cities to its hubs in Chicago, Denver and Houston -- are paying off. The no. 3 U.S. carrier by traffic beat earnings forecasts on Tuesday and raised its profit outlook for the year.
United also said it is throttling back growth plans and now expects capacity to increase by at most 5% this year as airlines pay about 60% more for jet fuel than a year ago.
That is still more than many other carriers are planning to grow, but below the high end of the range it flagged in January. That plan had rattled investors who feared it could spark a fare war between carriers.
Many investors are watching earnings reports this month for signs that carriers anticipate expanding less than planned. Delta Air Lines Inc. said last week that it would trim underperforming routes after the peak travel season ends.
United on Tuesday raised its profit outlook for the year by 25 cents a share to a range of $7.25 to $8.75, up from previous expectations of $7 to $8.50.
The higher guidance is a stark contrast to competitors. Delta last week cut its full-year profit expectations by $1 a share. American Airlines Group Inc. last week warned investors that its revenue per available seat mile would fall short of previous guidance.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UAL | UNITED AIRLINES HOLDINGS INC. | 52.67 | -1.36 | -2.52% |
United's passenger unit revenue came in 3% above last year -- at the high end of the range it had previously forecast. Costs aside from fuel were 0.4% lower than this quarter last year.
United posted a profit of $684 million in the second quarter, or $2.48 a share, compared to $821 million, or $2.67 a share, a year earlier. On an adjusted basis, earnings rose to $3.23 per share, topping the $3.07 analysts expected.