United’s revenue rises 17% despite a sharp increase in fuel costs

United Airlines ($UAL) reported quarterly revenue of $17.9 billion, up 17%, and a 16% increase in unit revenue. Earnings per share were $3.14, or $2.54 on an adjusted basis. Pretax profit reached $1.3 billion, equivalent to a 7.3% margin, while adjusted pretax profit was approximately $1.1 billion with a 6.2% margin. Premium and loyalty revenue each increased 17%, business revenue rose 26% and cargo revenue grew 23%.

The stronger sales performance came against a 62% increase in fuel expense, adding approximately $1.8 billion to costs compared with a year earlier. United expects fourth-quarter revenue growth of more than 20%, which would extend the current momentum if achieved. The forecast nevertheless concerns future sales, not guaranteed earnings, and the fuel-cost increase shows why revenue growth alone does not determine the airline’s eventual profit or cash generation.

Sources:

• United — issuer results release