Earnings preview: United Airlines likely to fly higher in Q3

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United Airlines Holdings (NASDAQ: UAL) is set to report its third-quarter earnings results on Tuesday, October 15, after the market closes. The results will be benefited from improved traffic and higher domestic travel demand amidst the Boeing 737 Max crisis.

The top-line performance will be hurt by the never-ending 737 Max woes, exposure to soft international markets, and hurricane Dorian. The 737 groundings have a relatively less impact on United Airlines as there were fewer aircraft under its hood. The grounding impacted the timing of the scheduled deliveries of Boeing 737 Max aircraft.

However, passenger traffic is expected to drive the top line higher for the third quarter. A healthy economy and reduced capacity are likely to turn the domestic air travel market strong. Apart from this, United Airlines will also be benefited from the fall in overall fuel prices, which could continue to decline through at least the end of this year.

United Airlines Q3 2019 earnings preview
Courtesy: United Airlines

Analysts expect the company’s earnings to jump by 29.10% to $3.95 per share and revenue will rise by 3.70% to $11.41 billion for the third quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. The majority of the analysts recommended a “hold” rating with an average price target of $110.24.

For the second quarter, United Airlines reported a 54% jump in earnings as the continued successful implementation of its strategy led to it delivering two straight quarters of solid pre-tax margin growth. The top line increased by 6% backed by higher passenger revenue.

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Revenue passenger miles for the second quarter grew by 5.1% and available seat miles rose by 3.6%. The consolidated passenger load factor increased by 1.2 points. For the full year 2019, the company expects adjusted earnings in the range of $10.50 to $12 per share and adjusted capital expenditures to be about $4.9 billion.

United’s peers American Airlines (NASDAQ: AAL), Southwest Airlines (NYSE: LUV) and Alaska Air Group (NYSE: ALK) will be reporting their quarterly results on October 24. On October 10, Delta Air Lines (NYSE: DAL) reported better-than-expected earnings for the third quarter of 2019 while revenue matched expectations.

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