United Airlines planes at Denver International Airport.
Leslie Josephs | CNBC
United AirlinesSecond-quarter profit rose more than 20% from a year ago as strong demand for international travel boosted the company's results, but its outlook for the third quarter fell short of estimates as oversupply of flights weighs on prices.
United said Wednesday it expects to earn $2.75 to $3.25 per share on an adjusted basis for the current quarter, below the $3.44 per share estimate of analysts polled by LSEG.
Here's what United reported for the second quarter compared to what Wall Street expected, based on median estimates compiled by LSEG:
Earnings per share: $4.14 adjusted vs. $3.93 expectedRevenue: $14.99 billion vs. $15.06 billion expected
United earned $1.32 billion, or $3.96 a share, in the three months ended June 30, up from $1.08 billion, or $3.24 a share, a year earlier. Adjusted for non-recurring items, the company reported earnings of $4.14 a share, compared with the $3.93 a share analysts had expected.
Revenue jumped to $14.99 billion, up 5.7% from the same period last year, though it was slightly below estimates.
United reiterated its full-year forecast for adjusted earnings in the range of $9 to $11 per share.
united And Delta Air LinesU.S. airlines, which also disappointed in their third-quarter forecasts, remain among the leading players in the U.S. aviation industry. Most airlines have been struggling with domestic capacity overhangs that have weighed on airfare prices, despite record demand.
Both airlines have added international flights, which were in high demand after the pandemic, and premium offerings, such as larger lounges and more spacious seats, to take advantage of travelers willing to pay more for a ticket.
United Airlines said Wednesday that its premium ticket revenue grew more than 8% from a year ago, while sales of more restrictive basic economy tickets rose 38%, as it works to meet the needs of both ends of the market.
The company expanded its domestic flights by more than 5% in the second quarter compared with a year ago, and revenue for the unit fell more than 1% compared with a year ago. Revenue on flights to and from Europe, a smaller segment of United’s sales, rose more than 5% compared with the second quarter of 2023.
United CEO Scott Kirby said airlines have cut their schedules and there will be a tipping point for adjusting the offer in mid-August.
“Looking ahead, we see many airlines beginning to eliminate loss-making capacity, and we expect to deliver leading unit revenue performance among our largest peers in the second half of the third quarter,” he said.
Tuesday, Spirit Airlines British Airways has cut its second-quarter forecast, citing weaker-than-expected revenue from fees such as seating or baggage charges. Southwest Airlines And American AirlinesApple, which will report results on July 25, has lowered its second-quarter estimates.
