United Airlines reported record third-quarter operating revenue of $17.88 billion, a 17% year-over-year gain, but missed analyst estimates by $30 million and saw earnings fall short as a 62% surge in jet fuel costs cut into profitability.
Revenue growth was broad-based. Cargo was the strongest performer, up 23%, followed by a 17% increase in premium and loyalty revenue and a 16% gain in basic economy. Passenger count rose 2.4%, with revenue per passenger mile and available seat miles up 0.7% and 1.3%, respectively.
Load factors were a soft spot. Domestic load factor compressed by 90 basis points, pulling consolidated load factor down 50 basis points from a year ago.
The fuel bill was the dominant story on the cost side. Fuel costs drove cost per available seat mile up 17.3%. Strip fuel out, and CASM still rose 7.8% versus the same quarter last year — reflecting underlying cost pressure that exists independent of the commodity spike.
Earnings came in at $2.54 per share, down 8.6% year-over-year and three cents below consensus.
For the fourth quarter, United is modeling jet fuel at $4.80 per gallon — a 21% increase over Q4 of last year. Against that backdrop, the carrier guided Q4 profit between $0.50 and $1.50 per share. Street consensus had been $1.75, a gap United attributed in part to analysts potentially assuming lower fuel prices. Fourth-quarter revenue is projected to grow more than 20% year-over-year, accelerating from the 17% gain posted in Q3.
United shares fell more than 2% in after-hours trading following the report. Delta and American moved modestly lower in sympathy.
For crew, the fuel cost trajectory is worth tracking. When unit costs climb this sharply — and guidance comes in well below what analysts expected — carriers face pressure on capacity decisions and, eventually, on labor cost negotiations. A Q4 fuel assumption of $4.80 per gallon, if it holds or worsens, will shape how United approaches scheduling and network planning heading into 2024.
