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Unites Tops Gain Estimates as MAX Misery Prompt Higher Fares in Strong Travel Sector

United Airlines Holdings on Tuesday reported a bigger-than-anticipated rise in second-quarter gains, driven by healthy air travel demand and the…

By Luann Reagan , in Industry Updates News , at July 17, 2019 3:10 AM EDT Tags: , ,

United Airlines Holdings on Tuesday reported a bigger-than-anticipated rise in second-quarter gains, driven by healthy air travel demand and the ability to cost more for seats after the grounding of Boeing’s 737 MAX reduced capability. The three U.S. airlines that control the MAX – United, American Airlines Groups and Southwest Airlines – are canceling thousands of flights every month since a global grounding in March following accidents in Ethiopia and Indonesia that killed a total of 346 people.

Chicago-based United stated net earnings grew 54% to $1.05 billion, i.e., $4.02 per share, within the quarter ended June 30 from $683 million, i.e., $2.48 per share a year ago. On a modified basis, the airline earned $4.21 per share for the quarter. Analysts on average predicted revenue of $4.08 a share, based on IBES data from Refinitiv.

The No. 3 U.S. air carrier is amid a three-year plan to cut back domestic market share from competitors by developing connections through its primary U.S. centers such as New York, Chicago, and San Francisco, cities that attract many travelers willing to fly first-class and business-class.

Citing consistent strong demand, United lifted its 2019 adjusted diluted earnings per share guidance to $10.5-$12.0 versus $10.0-$12.0 previously.

Still, the profits per share growth for the year is predicted to be sluggish than in 2018 because of the MAX grounding and closed Pakistani air space, which forced United to cawl its 2019 capacity development target for a second time the same year. It now expects the capability to increase between 3% and 4%, versus a real forecast of 4%-6% growth.