United Airlines Stock Takes Off After Company Updates Guidance On Continued Strong Demand

Shares of United Airlines Holdings Inc UAL left the runway Wednesday morning after the company issued updated guidance ahead of its presentation at Cowen's 15th Annual Global Transportation & Sustainable Mobility Conference.

What Happened: In a Form 8-K filing with the SEC, United Airlines said it continues to experience strong demand following a bustling summer for travel. As a result, the company has updated its third-quarter guidance.

United Airlines now expects total operating revenue in the third quarter to be up around 12% versus the third quarter of 2019.

The company also noted that it has seen improving operational reliability over the course of 2022, which has led to capacity trending higher than was originally expected. Capacity is now expected to be down 10% to 11% compared to the third quarter of 2019 versus prior estimates of approximately 11%.

United Airlines said costs have been in line with or slightly better than it originally anticipated, but spread over greater capacity. As a result, the company now expects operating expenses per available seat mile to be up around 16% versus the third quarter of 2019. Adjusted operating margins are also expected to improve to approximately 10.5%, up slightly from prior guidance of 10%.

Average aircraft fuel price per gallon has also ticked slightly higher. The company now expects average costs of $3.83 per gallon, which is up from prior guidance of $3.81 per gallon. 

Related Link: United Airlines Threatens To Suspend Service At JFK Airport: What's Going On?

Cowen Conference: Despite the slight increase in fuel price forecasts, the company isn't worried about supply disruptions in the back half of the year. During the Global Transportation & Sustainable Mobility Conference, United Airlines CFO Gerry Laderman noted that fuel supply isn't a top concern.

"For fuel, I would say no, we're not yet worried about that ... I can't predict prices. So we have a continued moderation in prices. But I wouldn't say that's at the top of our list of concerns," he said.

Instead, the company is focused on its aircraft and paying down debt. United currently has 44 of its 52 Boeing Co BA 777 planes up and running, the company said.

"As we go forward, and if Boeing lives up to their commitments to deliver us the aircraft we have on order in a timely manner, there would be a mix ... of some aircraft financing and using some cash to pay for aircraft," Laderman said.

"And I just want to remind everybody that as we grow and as we hit our margin targets under our United Next plan, the cash generation from that plan puts us on our plan to hit those leverage metrics. So it is, as I said, one of our primary focuses right now," he added.

UAL Price Action: United Airlines has a 52-week high of $53.11 and a 52-week low of $30.54.

The stock was up 5.52% at $38.60 on Wednesday, according to Benzinga Pro.

Photo: Luc Verkuringen from Flickr.