United Airlines (UAL) earnings 3Q 22

A United Airlines Boeing 777-200

Nicolas Economous | OnlyPhoto | Getty Images

United Airlines are forecasting further gains for the end of the year and consumer appetites for travel are showing no signs of slowing down despite high airfares.

Shares are up more than 7% in after-hours trading on Tuesday.

“Looking towards the end of the year, the airline expects strong Covid recovery trends to continue to outweigh recessionary pressures in the macroeconomic environment,” United said in an earnings release. “The airline now expects fourth-quarter adjusted operating margin to exceed 2019 for the first time.”

The Chicago-based airline posted profit of $942 million in the third quarter, down 8% from three years ago, and revenue of $12.88 billion, topping analysts’ estimates and up 13 from 2019 % has increased.

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Adjusted for one-time items, United earned $2.81 per share, slightly exceeding the $2.28 that analysts polled by Refinitiv had been expecting.

The airline expects fourth-quarter adjusted earnings per share of up to $2.25, well above analyst estimates of 98 cents, according to Refinitiv.

The strong summer travel season and sunny outlook for the rest of the year suggest consumers are poised to keep spending on travel, a turnaround since the pandemic began when Covid-19 restrictions shattered demand. Delta Airlines said last week it posted record third-quarter earnings and forecast another fourth-quarter profit.

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Airline executives’ optimistic outlook contrasts with other sectors that have struggled this year, including parts of retail and some streaming platforms, which benefited from lockdowns early in the pandemic.

Here’s how United performed in the third quarter versus Wall Street expectations, based on average estimates compiled by Refinitiv:

  • Adjusted earnings per share: $2.81 vs. $2.28 expected
  • Total sales: $12.88 billion versus $12.75 billion expected.

US airline executives have recently noted strong demand for Europe well past the summer peak and into the fall, and are holding more capacity in those markets in response, CNBC reported last month.

Airlines remain limited in the number of flights they can offer as aircraft deliveries are delayed due to supply chain issues and other issues and airlines scramble to hire and train new staff, especially pilots.

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The limited supply of flights keeps prices high. According to United, revenue per available seat mile rose more than 25% in the third quarter from three years earlier. For the current quarter, this metric is expected to increase by this amount compared to 2019.

Meanwhile, the airline said its capacity is likely to fall about 10% in the fourth quarter compared to 2019, similar to the third quarter.

United executives will have a call with analysts Wednesday at 10:30 a.m. EDT.

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