United Continental shares jumped by more than 3 percent in after-market trading Tuesday after the parent company of the third-largest U.S. carrier topped second-quarter profit expectations and raised its outlook for the year.
Revenue in the quarter ended in June rose close to 8 percent from the year-ago period to $10.78 billion, slightly higher than Wall Street estimates of $10.72 billion, the company said in releasing its earnings after the markets closed.
Airlines have been grappling with a profit-crimping surge in fuel costs, generally their second-largest expense after labor. It poses a conundrum for airlines that are trying to capitalize on robust travel demand — albeit at smaller profit margins. United's fuel costs surged 43 percent from the same quarter last year and weighed on the carrier's bottom line. Net income in the three months ended in June was $684 million, down nearly 17 percent.
Here’s what the company reported, versus what Wall Street expected:
- Earnings: $3.23 per share versus the $3.07 per share that analysts polled by Thomson Reuters expected
- Revenue: $10.78 billion versus the $10.72 billion analysts polled by Thomson Reuters expected
United CEO Oscar Munoz, who is scheduled to appear on CNBC Wednesday at 8 a.m. ET, came under pressure earlier this year after the airline launched an aggressive growth plan. Some investors worried that expanding the supply of seats in the market would suppress airfares. United trimmed its forecast for full-year capacity growth to as much as 5 percent from the up to 5.5 percent it forecast in April. Analysts expect airlines to scale back on growth once the peak summer travel season is over.