United Airlines (UAL) reported an improvement in its third-quarter earnings after the bell on Wednesday, a week after rival Delta (DAL) saw premium and business travelers boost its results.
Chicago-based United posted operating income of $15.2 billion versus $15.28 billion, according to the Bloomberg consensus, a slight miss but up 3% from a year earlier. United reported adjusted earnings per share (EPS) of $2.78 versus $2.66 estimated, with 87.42 billion seat miles available versus the expected 86.51 billion. The much-watched passenger revenue per available seat mile (PRASM) metric was $73.77 billion, down from an estimated $72.71 billion.
Looking ahead, United said it anticipates fourth-quarter adjusted EPS in the range of $3.00 to $3.50, exceeding the $2.82 estimate. The airline said it sees margins expanding by a point or more each year.
United shares fell more than 3% in early trading Thursday, although they reversed higher during the earnings conference call due to comments about the airline’s margin growth.
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“We’ve invested in customers at all price points: seat-back screens, an industry-leading mobile app, extra legroom, a reclining United Polaris seat, and fast, free and reliable Starlink on all planes by 2027. Our customers value the United experience, which makes them increasingly loyal to United,” CEO Scott Kirby said in a statement.
“Those investments over nearly a decade, combined with the excellent service of our people, have allowed United to gain and retain brand-loyal customers, leading to economic resilience even with macroeconomic volatility during the first three quarters of the year and significant improvement as the economy and demand are improving in the fourth quarter,” he added.
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United said premium cabin revenue increased 6% year over year in the third quarter, with Basic Economy revenue increasing 4% year over year and loyalty revenue increasing 9% year over year.
Last quarter, premium cabin and cargo revenue drove United’s revenue to a record $15.2 billion, and the company guided its full-year EPS range between $9.00 and $11.00. United said it would address full-year goals in its earnings call scheduled for tomorrow.
Last week, Delta said a “significant improvement” in its revenue outlook led the airline to adjust its outlook to the upper limits of its projection, with its premium business up 9% and corporate sales up 8%.
Despite a strong second quarter, United was plagued by operational problems earlier this year at one of its largest hubs, Newark Liberty Airport in New Jersey.
