Home BUSINESS United Airlines stock climbs, American descends on forecasts

United Airlines stock climbs, American descends on forecasts

Both carriers raised their profit forecasts for the year. Chicago-based United increased its full-year earnings target to $11 to $12 a share, compared with an earlier outlook of at least $10. American boosted its forecast $3 to $3.75 a share, compared with earlier guidance for no more than $3.50.

Large U.S. carriers are capitalizing on a rebound in global travel, particularly to Europe, as remaining pandemic-related restrictions ended and growth in domestic demand moderated. Travel this summer is expected to surpass record levels of 2019, but corporate demand remains soft. With capacity still partially limited by supply constraints, planes are expected to remain full as the industry looks beyond the peak summer travel season.

Delta said a week ago that it will make more money this quarter than analysts anticipated on the strength of soaring international demand and boosted its full-year profit expectations for the second time in three weeks.

United said revenue from international passengers rose 44% from a year ago as pandemic-travel restrictions eased and it saw a significant rebound in Pacific travel. Profit margins on international flying are stronger than U.S. flights.

International flying also helped lift business travel, which is critical to United and has been slower to rebound than leisure travel. The airline said revenue from international travelers flying for business grew 40% year over year, compared with 10% growth among domestic business travelers. Because of inflation, business travel revenue has recovered to pre-pandemic levels.

One hiccup in United’s otherwise positive international story is Newark Liberty International Airport, which is a major gateway for overseas flights. Frequent weather problems, limited runway and gate capacity combined with a shortage of air-traffic controllers have created major headaches at Newark.

United has gotten a handle on the problems, in large part by reducing flights. The airline says it’s cut the schedule to 390 flights a day, compared with its normal schedule of 435.

“The level of flight activity will be down until we can come up with a creative solution to the constraints,” Andrew Nocella, chief commercial officer at United, told analysts today. “Next summer will have a smaller schedule as well.”

Bloomberg contributed reporting.

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