United Airlines Reports Another Excellent Quarter -- but Momentum Is Slowing
United Airlines (NASDAQ: UAL) posted stellar earnings growth in the first half of 2019, as solid demand and lower fuel prices allowed the airline to expand its adjusted pre-tax margin to 8.6% from 6.5% a year earlier. As a result, adjusted earnings per share soared 45% year over year, to $5.32.
On Tuesday afternoon, United Airlines reported that earnings continued to grow at a rapid rate in the third quarter, surpassing management's initial forecast for the quarter. The company also raised its full-year guidance. That said, there are growing signs that United's earnings momentum is starting to peter out.
Entering the third quarter, United Airlines projected that passenger revenue per available seat mile (PRASM) would increase 0.5% to 2.5% year over year, while adjusted nonfuel unit costs would rise 1% to 2%. Meanwhile, the company expected to pay between $2.12 and $2.22 per gallon for jet fuel, down from $2.32 per gallon a year earlier. Due primarily to this expected drop in fuel costs, United estimated that its pre-tax margin would widen to between 10% and 12% in the third quarter, up from 9.6% in Q3 2018.
Source Fool.com
