United Airlines delivered its second quarter earnings report on Tuesday that beat most analysts estimates.
The U.S. airline reported a 2.1% rally on its second quarter revenue while its unit operating costs have gone up by 3% due to the rising labor costs that affected most of the industry. The company’s earnings stood at around $2.75 per share compared to analyst estimates of $2.57 EPS.
United Airlines’ revenue is now at around $10 billion which is more than 6% higher than consensus analyst estimates of $9.97 billion while its profits are coming in at around $818 million for the quarter that ended in June. This is 39% higher than the company’s profits during the same quarter last year.
Without special charges, the company’s net income stood at around $846 million and 13.2% in pretax margin. United Airlines also reported that it experienced a decline of 79% in the number of their passengers who were denied boarding during the month of May and a 88% decline last month.
The positive earnings came as a surprise a number of investors after the company received a global outrage over the incident where a passenger was dragged off a scheduled flight despite paying. Investors initially expected the company’s finances and sales to slide following the event after the public called for a boycott.
United Airlines have reportedly reached a settlement with the said passenger under undisclosed details. They also announced that they will make necessary changes to their system and company policies to ensure that no similar incidences will take place in the future.
Despite the upbeat earnings report, shares of the company slumped by 1.6% during the market session and 3.5% during the after hours trading after the company gave a lower profit guidance for the third quarter.
According to United Airlines, its third quarter passenger unit revenue might decline by 1% or may only rise 1%. The airlines also added that its third quarter capacity might only rise by 4% versus the 4.2% rise during the second quarter while its pretax margin for the third quarter is expected to come at around 12-14%.
The company’s orders for four Airbus A350 jets in 2018 will also be delayed while its orders for twelve Boeing 737 Max aircraft in 2019 and two Boeing 787-10 aircraft by 2019 will be accelerated.
United Airlines CEO Oscar Munoz said in a statement that the company’s financial and operating numbers are now improving and that its profit and margin gap with competing airlines are narrowing.