United Airlines Holdings raised its third-quarter revenue outlook Wednesday citing continued strong demand following a "robust summer."
United (ticker: UAL) now expects total operating revenue in the quarter to be up around 12% on 2019 levels, this is an increase from a previous forecast of 11%. Capacity expectations also improved to between 10% and 11% lower than 2019 levels, compared with an earlier outlook of 11% lower.
"Exiting a robust summer, the company continues to see a strong demand environment," United said in a filing .
Cost per available seat mile, excluding fuel—a key industry measure of cost efficiency where airlines aim for the lowest percentage possible—is expected to be up around 16% on 2019 levels, an improvement on the 16% to 17% originally forecast. United said this was down to costs in line with, to slightly better than, expectations but spread over a greater capacity. As a result adjusted operating margin is set to improve to 10.5% from 10%, United added.
The outlook for average aircraft fuel price per gallon rose slightly to $3.83 from $3.81.
The stock, which is more than 16% down so far in 2022 as of Tuesday's close, pointed 0.7% lower in premarket trading after initially rising.
Citi analysts said the guidance "looks positive" and put a better mood on the demand scenario. "Interestingly enough, one of the areas where the carrier did better was on ex-fuel seat mile cost guide, with the jet fuel cost outlook virtually unchanged. Ex-fuel opex has been a key pandemic-era concern for investors."
The airline has also threatened to suspend its service at New York's John F. Kennedy airport at the end of next month unless the Federal Aviation Authority grants the carrier more flights.
United said it has been pushing for additional takeoff and landing slots for more than a year in order to "grow to be more competitive," it told employees, in an email seen by Barron's. The carrier's CEO Scott Kirby wrote to acting FAA administrator last week urging him to increase capacity. If that request proves unsuccessful, United told employees it will suspend the service.
"That would obviously be a tough and frustrating step to take and one that we have worked really hard to prevent," the company said.