United Airlines Expects Weaker Q4 Earnings Amid Rising Costs

United Airlines Holdings (UAL:US) has forecasted a dip in fourth-quarter earnings due to mounting costs, causing its shares to decline by over 4% reported by Reuters. The anticipated adjusted profit is $1.50 - $1.80 per share, a noticeable dip compared to the previous year's $2.46 per share and falling short of the $2.06 per share that analysts had predicted.

A significant contributor to these rising costs is the surge in fuel prices since July. United stated that its fuel costs have risen by an impressive 20% since mid-July. This uptick is projected to lead to an 11% increase in the average fuel bill for the December quarter.

As we noted in our previous blog post in September, airlines, including United Airlines, have been updating their cost guidance due to the rising jet fuel costs, with many of their shares seeing significant drops.

United Airlines, the U.S. carrier with the most significant exposure to Israel, has temporarily halted flights to Tel Aviv, potentially increasing their non-fuel costs by up to 5% in the December quarter.

This suspension is noteworthy as Israel made up 1.9% of United's planned global capacity for the period. In response to concerns about rising costs and potential softening in domestic travel demand, the company's shares dipped by $1.84, trading at $38.28. 

Despite these challenges, the airline industry sees positive signs. United's third-quarter passenger revenue increased by 15% year-on-year. The revenue from premium products also grew by 20%. Consumer spending via the airline's loyalty credit cards rose significantly, and bookings for last-minute business trips in recent months have been robust.

The third quarter's adjusted profit was $3.65 per share, outperforming Wall Street's predictions. The results will be discussed in a forthcoming call with analysts and investors.

Congressman Ro Khanna was buying UAL shares in May this year. The stock is up by 7.82% year-to-date.