United Airlines Earnings Preview: What The Street Is Expecting, And What The Options Flow Says

The airline sector's earnings season got off to a strong start last week when Delta Air Lines Inc. DAL issued optimistic guidance as business and international travel began to pick up inside the third quarter.

Investors anticipate that United Airlines Holdings Inc. UAL, which announces earnings on Oct. 18, will maintain the trend by providing bullish forecasts and strong sales.

Here’s what the street is saying: Analysts forecast earnings growing to $2.26 per share, up from a loss of $1.02 per share a year ago. Sales are expected to increase 65% to $12.7 billion.

Check out United's rating page for more analyst ratings, and news. 

Increased air travel demand as a result of the September quarter's relaxation of COVID-related constraints may boost United's top-line performance.

Passenger revenues, which make up the majority of the top line, are likely to have climbed significantly from the reading from the prior quarter due to the positive passenger numbers.

The Labor Day holiday falling within the quarter is likely to have increased flight traffic even more.

However, inflationary pressures on fuel prices per gallon are will likely hurt the bottom line in the third quarter. According to UAL, the average price of jet fuel per gallon will be $3.83 in the third quarter, up from the $3.81 reported in the third quarter of 2021.

Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.

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For options traders with weekly calls to profit from United Airlines’s potential run higher or drop to new lows, the stock will need to move more than 7.98%, which is the implied move institutions have priced into the calls and puts expiring this Friday.

If United Airlines reacts to a lesser degree, the premiums will drop on Tuesday and the options are likely to expire worthless.