United Airlines lifts 3Q revenue estimate after busy summer
DALLAS (AP) — United Airlines said Wednesday that third-quarter revenue will be higher than it had expected due to strong summer travel demand, and the upbeat outlook helped push airline stocks higher.
Separately, United said it will end flights at John F. Kennedy International Airport in New York unless it can expand operations at the congested airport.
Chicago-based United estimated that July-through-September revenue will be 12% higher than in the same quarter of 2019, up from its previous projection of an 11% increase over pre-pandemic levels.
United paid slightly more than it had expected to for jet fuel, but that was offset by a slightly smaller increase in other costs on a per-seat basis. Profit margins, excluding special items, was about 10.5%, compared with a previous forecast of 10%, the company said.
Patrick Quayle, a senior vice president who oversees United’s global network, said strong sales have continued into September, with none of the usual end-of-summer decline in vacation bookings to destinations in Mexico, the Caribbean and Europe.
The number of corporate travelers remains below 2019 levels, although revenue is about the same or even up because of higher average fares, he said during a Cowen investor conference.
Strong ticket sales could last the rest of the year. JPMorgan airline analyst Jamie Baker, citing data from an Airbus subsidiary, said Wednesday that fourth-quarter booked revenue on United and American is running 20% over the same time in 2019.
Baker said it’s still early, the pace of corporate travel remains uncertain, and recession fears could become a factor. But so far, he said, there is “no clear evidence of any decelerating momentum” for the biggest airlines.
Meanwhile, United says it will suspend service at JFK Airport at the end of October unless federal regulators allow it to operate more flights to compete better against rivals such as JetBlue and American.
CEO Scott Kirby expressed the airline’s intentions in a letter last week to Billy Nolen, acting head of the Federal Aviation Administration.
The FAA responded in a statement Wednesday that if additional takeoff and landing slots at JFK are offered, it will follow a “well-established process of awarding them fairly and to increase competition.”
The FAA limits takeoff and landing slots at the major New York City-area airports to prevent congestion. United, which has been unable to get slots from other airlines, argues that JFK has room to grow because of improvements including wider runways and new taxiways.
United left JFK in 2015 to concentrate its operation at Newark, New Jersey, where it is the dominant airline. It returned to JFK last year but has a small presence, with two daily flights to both Los Angeles and San Francisco.
Shares of United Airlines Holdings Inc. rose about 4% in afternoon trading, with other U.S. airlines rising as well on Wednesday.