United posts $473 million 3Q profit on federal pandemic aid
United Airlines reported a $473 million profit for the third quarter thanks to more than $1 billion in federal pandemic aid that helped pay airline employees this summer.
Leisure travelers packed planes over the vacation season, but by the end of summer bookings tailed off as the delta variant drove an increase in COVID-19 cases, and a hoped-for rally in business travel fizzled.
Chicago-based United said Tuesday that fourth-quarter revenue will be 25% to 30% lower than during the same period of 2019 as the airline operates fewer flights than it did before the pandemic. Costs will rise on a per-seat basis.
Still, the company insisted that depressed areas of its business will recover and it will hit long-term financial targets.
Ordinarily United draws a large chunk of revenue from business and international travel, but both remain severely depressed. United and its closest rivals, American and Delta, hope to get a boost as more offices re-open and from the U.S. government’s decision to ease restrictions on vaccinated travelers from abroad on Nov. 8.
United announced last week that it will expand transatlantic service next year, including adding destinations it has never served in Jordan, Norway and island outposts of Spain and Portugal. United is lobbying foreign governments to resume seven routes to Europe and Asia that were suspended during the pandemic.
Domestic leisure travel has returned to roughly pre-pandemic levels. That prompted United to announce this month that it plans its biggest domestic schedule of flights since March 2020 to meet what it expects will be a surge in holiday travel.
For the third quarter, United’s $473 million profit compared with a loss of $1.84 billion last year and profit of $1.02 billion in the third quarter of 2019.
United said that excluding special items such as federal aid it would have lost $329 million, or $1.02 per share. That was better than analysts expected — a loss of $1.58 per share, according to a FactSet survey.
Revenue was $7.75 billion, about $110 million more than analysts expected but 32% below the same period in 2019.
Last week, Delta Air Lines reported a $1.2 billion profit for the third quarter but warned that rising fuel prices and labor costs will lead to a “modest” fourth-quarter loss.
United forecast that fuel prices will rise 12% from the third to the fourth quarter. It said other expenses will rise by 12% to 14% per seat in the fourth quarter — roughly double the increase that Delta predicted. In a company news release, CEO Scott Kirby said United is confident it will bring the cost figure below 2019 levels in 2022.
Labor costs are rising as airlines scramble to hire more pilots, flight attendants and other workers in a reversal of last year, when the carriers were hemorrhaging cash and encouraging employees to quit.
United officials declined to comment on the report until they hold a conference call with analysts and reporters on Wednesday.
Shares of United Airlines Holdings Inc. rose 2% after more than an hour of extended trading following release of the financial report. They ended the regular session down 2%, at $46.22.
David Koenig can be reached at www.twitter.com/airlinewriter