United Airlines Shares Move Higher on Optimistic Q4 Guidance

By Scott Kanowsky

Investing.com -- Shares in United Airlines Holdings Inc (NASDAQ:UAL) soared by more than 6% on Wednesday after the major U.S. airline predicted that it will post fourth quarter earnings above Wall Street estimates.

In a statement, the Chicago-based carrier said it expects to report adjusted earnings per share of between $2.00 to $2.25 in its current quarter, which would be well ahead of consensus expectations of $0.83 a share. Adjusted operating margin is also seen rising above 2019 levels for the first time.

United pointed to a strong continued recovery in passenger traffic following the relaxation of COVID-19 travel restrictions, adding that it believes this demand uptick will help "overcome" economic headwinds, particularly from increased input cost inflation.

However, the company plans to still be flying less than before the pandemic. Fourth quarter capacity is anticipated to come in at 9% - 10% under pre-COVID levels.

“Despite growing concerns about an economic slowdown, the ongoing COVID recovery trends at United continue to prevail and we remain optimistic that we’ll continue to deliver strong financial results in the fourth quarter, 2023 and beyond,” said chief executive officer Scott Kirby.

The rosy guidance comes as United reported adjusted diluted income per share of $2.81 in the third quarter, beating estimates. It also marked a rebound from a loss of $1.02 a share in the corresponding period last year.

Total revenue per available seat mile - a measure of United's efficiency - grew by 32.3% year-on-year. Meanwhile, when excluding expenses related to fuel, special charges, third-party business costs and profit sharing, cost per available seat mile dipped to 11.22 U.S. cents, below the expectations set out by analysts at Citi Research.