United posts $1B profit on summer travel

Airline has grown aggressively in some markets.

DALLAS — Cheaper jet fuel and slightly higher fares helped United Airlines boost third-quarter profit 23% to $1 billion. The results released Tuesday were better than Wall Street expected, and United raised its forecast of full-year profit.

United indicated that demand for leisure and business travel is holding up well despite concern about the slowing global economy, although there are pockets of weakness, such as China.

The worldwide ground- ing of the Boeing 737 Max after two fatal crashes led to thousands of canceled flights and lost revenue for United, although the com- pany did not provide figures. The airline has removed the Max from its schedule until Jan. 6 and dropped nearly 8,300 flights between Octo- ber and early January. Investors worry that when the grounded planes return to United, Southwest and Amer- ican, there will be more seats for sale and fares will drop. Cowen analyst Helane Becker said rising capacity — not all of it from the Max — will cause United’s revenue per mile to decline next year. United didn’t forecast that far ahead, but it said revenue per seat will be flat to up 2% in the fourth quarter.

A few years ago, United lagged its closest competitors by many financial and operational measures. It has since reduced delays and cancellations and boosted margins above those at American Airlines, although it’s still behind Delta Air Lines.

Since early last year, United has grown aggressively in Chicago, Denver and other places. Rapid growth often spooks investors. Analysts at Fitch Ratings were worried about United’s strategy, but now they say the results have been positive, leading to above-average increases in revenue per mile and several quarters of improving margins.

United’s third-quarter profit compared with $833 million a year earlier. Excluding one-time gains and losses, the company said adjusted profit was $4.07 per share, compared with an average forecast of $3.94 from 17 analysts surveyed by Zacks Investment Research. Revenue was slightly below expectations, at $11.38 billion.