United Airlines Holdings expects brand-loyal flyers and demand for its premium seats to drive profit through the end of the year, maintaining momentum after reporting better-than-expected earnings for the third quarter.
The Chicago-based airline on Wednesday released a forecast for adjusted earnings per share (EPS) in a range of $3 to $3.50 for the fourth quarter. That¡¯s ahead of the $2.82 average of analyst estimates compiled by Bloomberg.
The carrier also expects full-year results at the upper end of its guidance. In July, United predicted full-year adjusted EPS of $9 to $11.
United and rival Delta Air Lines have pushed their high-end offerings as they seek to differentiate themselves from budget carriers and cash in on resurgent demand for a more luxurious travel experience. That strategy has helped the major U.S. airlines improve their finances after air travel plummeted earlier this year.
A revival in demand for basic economy fares, along with strong sales of premium tickets, drove United to adjusted earnings of $2.78 per share in the three months to September, the airline said, surpassing the $2.66 expected on average by analysts polled.
United shares rose 1.6% in U.S. post-market trading to $105.73. The stock has gained 7.2% this year, compared with a 2% increase in Delta shares.
The carrier¡¯s push to lure and retain picky passengers and investments in its fleet have provided a buffer against economic turmoil, with ¡°significant upside as the economy and demand are improving in the fourth quarter,¡± Chief Executive Officer Scott Kirby said in a prepared statement accompanying the results.
United¡¯s premium revenue was up 6% compared with last year, while basic economy was up 4%, the carrier said. United had a consolidated load factor ¡ª the percentage of seats filled by paying passengers ¡ª of 84.4% in the quarter, lower than the 85.3% analysts were expecting. Delta reported a load factor of 86% last week.
Investors on an earnings conference call slated for Thursday will be eager for the airline¡¯s comments on the U.S. economy as well as its operations at Newark Liberty International Airport ¡ª one of United¡¯s main international hubs ¡ª following system outages earlier this year.
A labor agreement with the union representing flight attendants, which is expected to be reached next year, is another area of focus.
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