High Price Of Fuel And War In The Middle East Will Impact Profits Of United Airlines

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High Price Of Fuel And War In The Middle East Will Impact Profits

This summer, big airline networks like United Airlines and others benefitted a lot due to a higher surge in trips. However, most of the revenue of those carriers comes in the second and third quarters.

Despite a surge in trips, United Airlines complained about a possible negative impact on its profits due to mainly two reasons. The first reason is that jet fuel is getting expensive, while the second reason is that the carrier’s flights to Tel Aviv are also at a halt due to the war between Israel and Hamas.

According to reports by CNBC,

For the current quarter, the Chicago-based carrier estimated adjusted earnings of between $1.50 and $1.80 a share, below analysts’ forecasts of $2.06. United would then earn between $9.55 and $9.85 a share, on an adjusted basis, down from its forecast in July of between $11 and $12 a share, based on its projection for the fourth quarter. Jet fuel prices in major U.S. airports are up nearly 25% since the start of summer.

These factors led to a drop in the share of United Airlines, close to 4% in after-hours trading.

Almost every international carrier, including United Airlines, halted their flights to Israel at the start of October. Compared to all airline networks based in the United States, United Airlines has the most services to Israel. Flights to Israel are possible from Washington (DC), San Francisco, and New York.

If flights to Israel remain suspended only through October, United Airlines’ fourth-quarter revenue will rise year over year by 10.5% if the suspension. However, if the suspension stays by the end of the year, the revenue shall rise by only 9%. United Airlines also said that the costs, excluding fuel, will increase between 3.5% and 5% in the fourth quarter of 2022.

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