Categories AlphaGraphs, Earnings

United Airlines Q3 profit jumps 30% amidst rising fuel costs

United Airlines parent United Continental Holdings (UAL) reported a 30% jump in earnings for the third quarter helped by double-digit revenue growth despite a steep rise in fuel costs. The top line came in above analysts’ expectations, while the bottom line missed consensus estimates. Following this, the stock gained over 4% in the after-hours session.

Net income climbed 30% to $836 million and earnings soared 42.3% to $3.06 per share. Non-GAAP earnings increased 36% to $3.06 per share. Revenue grew by 11.2% to $11 billion.

United Continental third quarter 2018 Earnings Infographic
United Continental Q3 2018 Earnings Infographics

Looking ahead into the full year 2018, the company narrowed its adjusted earnings outlook to the range of $8.00 to $8.75 per share from the previous estimate of $7.25 to $8.75 per share. The company currently expects to recapture about 90% of the estimated $2.5 billion year-over-year increase in full-year 2018 fuel expense. The company remained confident in achieving the ambitious adjusted earnings target of $11 to $13 per share for 2020.

For the fourth quarter, United Airlines didn’t provide any earnings guidance. It expects revenues to increase 3% to 5%, while the capacity addition to come between 5% and 6%. The company expects fuel consumption to be in the range of 1.015 billion to 1.035 billion gallons in the fourth quarter.

For the third quarter, the company recaptured about 100% of its year-over-year fuel expense increase. Load factor improved to 86% from 85.3% reported last year. Unit revenues, a key metric tracked by analysts, rose 6.1% over the prior year, while cost per available seat mile (CASM) grew 6.4% in the quarter due to the surge in fuel costs.

Experts believe that the airline sector will witness an increase in passenger fares and luggage fees in the upcoming months if the oil market uncertainties persist. The rising fuel costs continue to dampen the aviation industry.

Shares of United Continental ended Tuesday’s regular session up 2.68% at $83.52 on the Nasdaq. The stock has risen over 23% in the year so far and over 24% in the past year.

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