United Airlines planes at Denver International Airport.
Leslie Josephs | CNBC
united airlinesSecond-quarter profit rose more than 20% from a year ago as strong demand for international travel boosted the airline's results, but its third-quarter forecast came in below estimates as an oversupply of flights weighed on fares.
United said Wednesday it expects to earn between $2.75 and $3.25 per share on an adjusted basis in the current quarter, lower than the $3.44 per share estimated by analysts surveyed by LSEG.
Here's what United reported for the second quarter compared with what Wall Street expected, according to average estimates compiled by LSEG:
- Earnings per share: Adjusted $4.14 vs. expected $3.93
- Revenue: $14.99 1 billion versus the expected 15.06 billion dollars
United earned $1.32 billion, or $3.96 a share, in the three months ended June 30, compared with $1.08 billion, or $3.24 a share, a year earlier. Adjusted for one-time items, it reported earnings of $4.14 a share, versus the $3.93 expected by analysts.
Revenue of $14.99 billion was up 5.7% from the same period a year ago, but just shy of estimates.
United reiterated its full-year forecast for adjusted earnings of $9 to $11 per share.
United and Delta airlineswhich also disappointed with its third-quarter forecasts, remain the standouts in the US airline industry. Most airlines have struggled to cope with a surge in domestic capacity that has hit airfares, despite record demand.
Both airlines have added international flights, which have been in high demand after the pandemic, and premium offerings such as larger lounges and roomier seats, tapping into travelers willing to pay more for a ticket.
United said Wednesday that premium revenue grew more than 8% from last year, while sales of the more restrictive basic economy tickets rose 38%, as it works to serve both ends of the market.
The company expanded domestic flights by more than 5% in the second quarter from a year ago, and unit revenue fell more than 1% from a year ago. Revenue from flights to and from Europe, which represents a smaller portion of United's sales, rose more than 5% compared with the second quarter of 2023.
United CEO Scott Kirby said airlines have been cutting back on schedules and there will be a tipping point to moderate supply in mid-August.
“Looking ahead, we see that several airlines have begun to cancel loss-making capacity, and we expect leading unit revenue performance among our largest peers in the second half of the third quarter,” he said.
On Tuesday, Spirit Airlines lowered its second-quarter forecast, citing weaker-than-expected revenue from fees such as seating and baggage. Southwest Airlines and American Airlineswhich will announce its results on July 25, had previously lowered its estimates for the second quarter.
