United Airlines Sees Strong Q2 Profit Amid Rising International Demand, But Q3 Projections Underwhelm
Leslie Josephs | CNBC
United Airlines reported a significant rise in its second-quarter profit, fueled by robust international travel demand. The airline’s profit jumped over 20% year-over-year, posting adjusted earnings per share (EPS) of $4.14, surpassing Wall Street’s expected $3.93. Revenue also saw a 5.7% increase to $14.99 billion, just shy of the $15.06 billion anticipated by analysts.
Despite this solid performance, United’s third-quarter forecast fell short of expectations. The airline projected an adjusted EPS between $2.75 and $3.25, lower than the $3.44 estimated by analysts polled by LSEG. The airline attributed this to an oversupply of flights impacting fare prices.
United maintains its full-year adjusted EPS forecast of $9 to $11. Both United and Delta, despite lowering their third-quarter outlooks, have been outperformers in the U.S. airline sector. They have managed to capitalize on post-pandemic international travel demand and premium offerings.
The airline reported premium revenue growth of more than 8% year-over-year and a 38% increase in sales from basic economy tickets, reflecting a strategic effort to cater to both high-end and budget travelers. United’s domestic flying increased by over 5% in Q2, though unit revenues dropped by more than 1%. Notably, yields on European routes rose more than 5% compared to the previous year.
United’s CEO Scott Kirby noted that airlines are adjusting their schedules to balance supply and demand, predicting a shift in mid-August. He highlighted that various airlines have begun cutting loss-making capacity, and United expects strong unit revenue performance compared to major competitors in the latter half of the third quarter.
This announcement comes as Spirit Airlines and other carriers like Southwest and American Airlines have already adjusted their forecasts due to weaker revenue expectations.
Original Story https://www.cnbc.com/2024/07/17/united-ual-earnings-q2-2024.html
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