United Airlines (NASDAQ:UAL) faced a severe setback with its stock prices plummeting by over 7% during Wednesday morning trading, causing a ripple effect across the entire aviation industry. This crisis unfolded after the airline delivered a pessimistic outlook for its fourth-quarter profits, primarily attributed to the surging costs of jet fuel.
Adding to the predicament, United’s revenue projections are expected to remain disappointing as long as flights to Israel remain suspended due to the Israel-Hamas conflict. The airline’s third-quarter earnings report, released after the market’s closure on Tuesday, initially surpassed Wall Street’s expectations both in profit and revenue, with a total of $1.14 billion in earnings.
Nevertheless, investors swiftly shifted their focus to the airline’s forecast for the fourth quarter. United anticipated its earnings to range between $1.50 and $1.80 per share, a significant drop from analysts’ consensus of $2.09 per share. The uncertain revival of flights to Tel Aviv, whether in the upcoming month or possibly not until the year’s end, largely influences the final profit figures.
With the prevailing projections indicating a prolonged Israel-Hamas conflict, Cowen analyst Helane Becker expressed a bleak perspective, suggesting that United’s fourth-quarter outlook is even more dismal than her initial estimates. United had been offering flights to Tel Aviv from San Francisco, Washington, and Newark, New Jersey—a more extensive service to Israel compared to Delta Air Lines and American Airlines. All three airlines halted their services soon after the onset of hostilities when Hamas militants attacked Israel on October 7th.
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