Shares of United Airlines (UAL) experienced a 2% decline following the release of its third-quarter financial results, which presented a mixed picture. The Chicago-based airline reported earnings per share (EPS) of $2.78, surpassing analysts’ expectations of $2.65. However, its revenue for the quarter, totaling $15.23 billion, fell short of the forecast of $15.33 billion.
Third Quarter Financial Highlights
In comparison to the previous year, United Airlines saw a sales increase of 2.6%. Here are the key financial figures for the third quarter:
- Earnings per Share (EPS): $2.78
- Revenue: $15.23 billion
- Revenue Growth YoY: 2.6%
Guidance for Fourth Quarter
Looking ahead, United Airlines projects an EPS of between $3.00 and $3.50 for the fourth quarter. This forecast exceeds Wall Street’s expectations, which anticipate a profit of $2.87 per share.
Capacity Expansion and Revenue Insights
Despite industry trends where many competitors are scaling back growth plans amidst economic uncertainty, United Airlines is increasing its capacity. The airline boosted its overall capacity by 7% compared to the same quarter last year. Nonetheless, unit passenger revenue saw declines, with a 3.3% drop in domestic travel and a 7.1% decline internationally.
- Overall Capacity Increase: 7%
- Domestic Unit Revenue Decline: 3.3%
- International Unit Revenue Decline: 7.1%
Notably, United’s loyalty program sales rose by 9% year-over-year. Management emphasized their strategy to attract affluent travelers willing to invest in premium and first-class services. As part of this initiative, the airline has expanded its global network to include unique destinations like Greenland and Mongolia. Premium cabin revenue saw an increase of 6% during the third quarter.
Analyst Ratings and Stock Outlook
The consensus among 17 Wall Street analysts for United Airlines stock is a Strong Buy. This rating comprises 16 Buy recommendations and one Hold. The average price target for UAL stands at $117.94, indicating a potential upside of 13.35% from current stock levels. It is important to note that these ratings may shift in response to the latest financial results.
