United Airlines beats expectations, but fuel costs surge by $6 billion, weighing on stock price
United Airlines announced its second-quarter financial results on Wednesday, with revenue and profit exceeding market expectations and raising its full-year profit guidance. However, the company warned that fuel costs this year will increase by nearly $6 billion compared with expectations at the beginning of the year, and the stock price fell under pressure after hours. The financial report showed that United Airlines' adjusted earnings per share in the second quarter were US$1.99, higher than market expectations of US$1.88; revenue reached US$17.67 billion, also exceeding analysts' estimates of US$17.61 billion. Capacity in the quarter increased by 3.5% year-on-year, and total revenue increased by 16% compared with the same period last year. Premium cabin revenue, business travel and cargo business all recorded double-digit growth. Fuel costs are the biggest drag. Affected by the international situation, aviation fuel prices have risen sharply. According to data from the American Air Transport Association, as of July 15, aviation fuel prices at major airports in the United States have increased by 34% compared with the end of June. United Airlines' second-quarter fuel expenses increased 84% year-on-year to $2.3 billion. The company expects its full-year fuel bill to increase by nearly $6 billion from its forecast at the beginning of the year. United Airlines said it would offset cost pressures through price increases and capacity adjustments. Approximately 50% of the incremental fuel cost has been recovered through fare increases in the second quarter, and 80% to 90% is expected to be recovered in the third quarter, with full coverage in the fourth quarter. The company also raised its full-year adjusted earnings per share guidance to $9 to $11, higher than the range of $7 to $11 given in April. Affected by concerns about fuel costs, United Airlines shares fell more than 3% in after-hours trading. Management stated that if fuel prices remain high, further reductions in capacity plans may be possible.