United Air jumps as quarterly profit forecast tops estimates

United Airlines Holdings Inc. sees profit well above Wall Street’s estimates in the final quarter of the year, fueled by rebounding corporate travel and leisure trips that would have been skipped before the rise of remote work.

Earnings will be $2 to $2.25 a share in the period, United said in a statement Tuesday, resuming a quarterly profit forecast that it had suspended early in the pandemic. Analysts projected 96 cents on average, according to estimates compiled by Bloomberg.

Its shares climbed 7.9% as of 4:39 p.m. after regular trading in New York. Other carriers, including Southwest Airlines Co. and American Airlines Group Inc., also rose.

United joined rival Delta Air Lines Inc. with a robust fourth-quarter outlook as the industry tries to steady itself following an uneven summer travel season and capitalize on strong demand. Large companies have resumed lucrative international trips after requiring workers to return to offices, joining leisure travel that already had rebounded. That’s helping keep fares elevated even after summer.

“Despite growing concerns about an economic slowdown, the ongoing Covid recovery trends at United continue to prevail,” Chief Executive Officer Scott Kirby said in the statement. He will address analysts on United’s quarterly conference call Wednesday morning.

The Chicago-based carrier also said Tuesday that adjusted earnings in the third quarter were $2.81 a share, topping the $2.29 average analyst estimate. Revenue was $12.88 billion, compared with an expected $12.72 billion. Costs to fly each seat a mile rose 14.5%, excluding fuel, below United’s own forecast for a 16% jump.

Margin Guidance

United was the second US carrier to report quarterly results, and will be followed by American on Thursday. A group of 11 domestic airlines should report combined operating revenue of $54.5 billion and a net profit of $2.8 billion for the three months that ended Sept. 30, according to Michael Linenberg, a Deutsche Bank analyst.

United stood by guidance that it will have a pretax margin of about 9% for 2023, above the 4.3% expected by analysts. Its adjusted operating margin will exceed 2019 levels for the first time in the fourth quarter.

The carrier will continue to hold flying capacity as much as 10% below 2019 levels amid a pilot shortage that’s keeping some planes grounded at its regional partners. For the full year, capacity will be 13% below pre-pandemic.