United earnings top estimates but airline expects $6 billion in added fuel costs - CNBC
United Airlines reported second-quarter earnings that beat Wall Street expectations, but warned of a $6 billion increase in annual fuel costs. The airline is passing these costs to consumers through higher fares to offset the impact of geopolitical instability in the Middle East.
Why it matters
Rising fuel costs and geopolitical tensions are creating significant financial headwinds for the aviation industry, potentially leading to sustained higher airfares for travelers.
United Airlines ' second-quarter results came in ahead of Wall Street estimates, but billions of dollars in added fuel costs continue to weigh on earnings, the carrier said Wednesday.
United forecast third-quarter adjusted earnings per share of between $2.50 and $3.50, compared with analysts' estimates for $3.60 a share. It estimated full-year adjusted earnings per share of between $9 and $11, the higher end of the range of the adjusted $7 to $11 a share it forecast in April , when it cut its January forecast after the U.S. and Israel attacked Iran in late February.
According to Argus data published by industry group Airlines for America, jet fuel prices at major U.S. airports are up 34% in July alone through Tuesday amid a roller coaster of escalating and deescalating conflict between the U.S. and Iran. Jet fuel is the largest cost for airlines after labor.
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