Investing.com — Shares of United Airlines Holdings (NASDAQ:) fell more than 1% in premarket trading Thursday after reporting weaker-than-expected second-quarter earnings and current quarter guidance that fell short of estimates from Wall Street amid slowing air travel demand.
The airline reported adjusted earnings per share of $4.14 on revenue of $14.99 billion. Analysts polled by Investing.com expected earnings of $3.98 per share on revenue of $15.11 billion.
Cost per available seat mile, or CASM, decreased 4.8% in the second quarter compared to CASM in the second quarter of 2023.
Looking ahead, the airline forecast third-quarter adjusted earnings per share of $2.75 to $3.25, below the estimate of $3.59.
The weaker expectations come at a difficult time for the airline industry, as a number of U.S. airlines have recently identified this summer and mid-August as a turning point, United Airlines said, with “published changes to flight schedules causing a decline in industry capacity by approximately Show 3 points.” growth rate.”
As the turning point approaches, several airlines are cutting loss-making capacity, according to United Airlines, which touted improved performance in the second half of the third quarter.
“Looking ahead, we see several airlines have started canceling loss-making capacity, and we expect unit revenues among our top competitors to deliver industry-leading performance in the second half of the third quarter,” it added.
For the full year, the airline still expects adjusted earnings per share between $9.00 and $11.00.
Commenting on the report, Citi analysts said UAL’s results were “solid, with strong unit cost management and lower fuel consumption offsetting slightly lower than expected unit revenue.”
“While Q3 expectations were below consensus, the market appeared to have already priced in these expectations as rival Delta Air Lines (NYSE:) made very similar comments during their earnings release last week.”
Citi added that the stock appears “attractive” at this valuation.
Analysts at Morgan Stanley expressed similar thoughts, saying they would buy “any weakness in airline stocks in the coming days” after UAL’s second-quarter earnings. This, and more importantly, management’s commentary calling for an inflection of industry capacity “should set the inventory (and space) up nicely for the second half of 2025 through 2025,” they added to.
“We believe the commentary is more forward-looking and relevant than the disappointing UAL Q3 guidance, which reflects the July/August 1 setback.”
(Yasin Ebrahim contributed to this report)
