United Airlines said more expensive jet fuel and the suspension of its Tel Aviv flights during the Israeli-Hamas war will hurt its profits in the last three months of the year.
For the current quarter, the Chicago-based carrier estimated adjusted earnings of between $1.50 and $1.80 per share, below analysts’ forecasts of $2.06.
United would then earn between $9.55 and $9.85 per share on an adjusted basis, down from its July forecast of between $11 and $12 per share, based on its fourth-quarter forecast. Jet fuel prices at major US airports have risen almost 25% since the start of the summer.
The company’s shares were down about 4% in after-hours trading.
United and other US and international airlines suspended flights to Israel earlier this month. United had more flights to Israel than any other U.S.-based carrier, with flights from Washington, D.C., Newark, New Jersey, and San Francisco.
United said its fourth-quarter revenue would increase between 9% year-over-year if Israel flights remain suspended through the end of the year, and 10.5% if the suspension lasts only through October. Costs, excluding fuel, are expected to rise between 3.5% and 5% in the fourth quarter starting in 2022, United said.
The service suspension comes after a robust summer for air travel, with revenue growth for international destinations outpacing domestic ticket sales. That has put big, global airlines like United and Delta on a stronger footing than some discount carriers like Spirit, which are more focused on US cities and expect to lose money.
Here’s what United reported for the third quarter compared with what Wall Street expected, based on average estimates compiled by LSEG, formerly known as Refinitiv:
- Adjusted earnings per share: $3.65 versus an expected $3.35
- Total revenue: $14.48 billion vs. $14.44 billion expected
United reported third-quarter net income of $1.14 billion, or $3.42 per share, compared with $942 million, or $2.86 per share, a year earlier. Excluding one-time items, United reported earnings per share of $3.65.
Revenue rose to $14.48 billion from $12.88 billion.
The airline will hold a conference call with analysts and the media on Wednesday at 10:30 a.m. ET, when it will face questions about fourth-quarter demand and how it plans to rein in rising costs.
