United Airlines (UAL) -) shares slumped lower in pre-market trading after the carrier issued a muted near-term outlook that offset a solid third quarter earnings report after the close of trading Tuesday.
United said adjusted earnings for the three months ending in September came in at $3.65 per share, a 30% surge from the same period last year that was well ahead of the $3.35 per share Street forecast. Revenues were up 12.5% from last year to $14.5 million and profit margins advanced to 12.2%.
Looking into the current financial year, however, United said it expects adjusted earnings in the region of $1.50 to $1.80 per share, a figure that was firmly shy of the LSEG-complied estimate of $2.06 per share and down 33% from last year at the mid-point.
Rising fuel costs, which are expected to jump by around 11% over the three months ending in December, as well as the suspension of flights to Israel will eat into both United's overall cost and capacity bases.
"Our strategy to diversify our revenue streams, capitalize on growth opportunities and constantly innovate to enhance our products for our customers is paying off," said CEO Scott Kirby. "Our United Next strategy is working and we remain on track to hit our financial targets."
United Airlines shares were marked 7.45% lower in early Wednesday trading to change hands at $37.12 each.
Last week, United's larger rival, Delta Air Lines (DAL) -) forecast firmer fourth quarter revenue growth, but cautioned that rising jet fuel prices would eat into its overall profits.
Delta clipped its 2023 forecast to between $6 to $6.25 per share, down from its prior forecast of between $6 and $7 per share.
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