United Airlines claimed that more expensive jet fuel and a suspension of the airline’s Tel Aviv flights during the Israel-Hamas conflict will surely reduce its earnings in the last three months of the year.
The Chicago-based supplier estimated adjusted earnings of between $1.50 and $1.80 per share for the current quarter, which fell short of analysts’ forecasts of $2.06.
If flights to Israel are halted through the end of the year, United stated its fourth-quarter revenue will increase year over year between 9% and 10.5%; if the ban just lasts through October. According to United, its expenses, excluding gasoline, would probably increase by 3.5% to 5% in the fourth quarter of 2022.
The United forecast’s high end expects that the airline will start flying again to Tel Aviv in the next month, while its low end predicts that there won’t be any more flights this year.
The flights were terminated by United and several other airlines immediately after the Oct. 7 attack by Hamas terrorists on Israel.
Since the beginning of July, the cost of jet fuel has increased by roughly a third, keeping pace with the rise in the price of oil.
Despite paying nearly a dollar more per gallon a year ago, United paid an average of $2.95 per gallon in the third quarter. However, it anticipates paying $3.28 per gallon in the fourth quarter.
In extended trading, parent company shares of United decreased by more than 4%.
Early this month, United and other American and foreign airlines stopped operating flights to Israel.
In comparison to other American airlines, United offered more flights to Israel from Washington, D.C., Newark, New Jersey, and San Francisco.
After a busy summer for air travel, with domestic ticket sales surpassing revenue growth for overseas destinations, the service has been suspended.
Because of this, major international airlines like United and Delta are now in a stronger position than other low-cost carriers like Spirit, who concentrate more on American cities and anticipate losses.
Based on the typical projections collected by LSEG, previously known as Refinitiv, this is how United’s third-quarter results compare to what Wall Street anticipated:
- Earnings per share after adjustments: $3.65 vs $3.35 anticipated
- Total sales came to $14.48 billion vs $14.44 billion predicted.
In comparison to the same period last year, United’s third-quarter nett income was $1.14 billion, or $3.42 per share. After taking special considerations into account, United reported profits per share of $3.65.
From $12.88 billion in revenue, it increased to $14.48 billion.
The carrier will have a call with analysts and the media to answer concerns about fourth-quarter demand and how it intends to rein in soaring costs.
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