NEW YORK: United Airlines Holdings Inc expects resilient travel demand to drive up its full-year profit, even in the face of soaring fuel costs that sapped the US airline’s outlook for the current quarter.
Shares in the Chicago-based airline fell about 3% in US postmarket trading after it forecast adjusted third-quarter earnings of US$2.50 to US$3.50 a share – below the US$3.62 Wall Street expects on average.
United also expects about US$6bil in added fuel costs for 2026.
The tepid forecast highlights the whiplash endured by airlines as fighting in the Middle East sent jet fuel costs – among their biggest expenses – soaring earlier this year, with no clear end to the conflict in sight.
Even so, United joined rival Delta Air Lines Inc in saying that strong travel demand, particularly for premium and international offerings, has helped offset rising costs.
United raised the lower end of its full-year profit forecast and posted second-quarter earnings that topped expectations.
It now expects adjusted earnings of US$9 to US$11 a share for the year – compared to US$7 to US$11 it saw previously – encompassing Wall Street’s average estimate of US$10.51.
United on Wednesday reported earning an adjusted US$1.99 a share in the second quarter, exceeding the US$1.85 analysts polled by Bloomberg expected on average.
United in April slashed its original annual earnings outlook of US$12 to US$14 a share and reduced planned capacity growth, warning that it would initially be able to recover only part of the additional fuel expense through higher fares.
Delta last week reaffirmed its annual profit forecast, saying demand helped offset the highest quarterly fuel expense in the carrier’s history.
Jet fuel costs have rebounded in recent days in the United States amid a return to fighting in the Strait of Hormuz.
On the Gulf Coast, the benchmark for the United States, spot jet fuel priced around US$3.67 a gallon (3.8 litres) on Tuesday – well below its peaks from the war, but considerably elevated from pre-war prices around US$2.30 a gallon.
The results reinforced the advantage enjoyed by the two most successful US airlines, which have built their businesses around higher-spending travellers, international networks and lucrative loyalty programmes. United is also continuing to refine products it sells throughout its aircraft cabins.
The airline said it will replace the middle seat in certain economy plus rows on 50 Airbus SE A321XLR aircraft with a shared table, giving the passengers in the aisle and window seats additional space.
The product resembles British Airways’ short-haul business-class layout, which blocks the middle seat, and is another example of airlines carving out increasing distinctions between cabin products.
The configuration will debut on domestic flights later this year, followed by international service in early 2027.
Delta has taken a different approach, introducing stripped-down “basic” fares for its first class and international premium cabins that offer the seat while removing benefits such as lounge access and advance seat assignments. — Reuters
