The airline guided fourth-quarter adjusted earnings to $0.50 to $1.50 a share, which implies no more than $7.22 for the year against a prior range of $9 to $11. Its chief executive said fuel will stay elevated through 2027. Shares reversed from an early premarket dip and were up 7.0% at 1:46 p.m.
United Airlines delivered the kind of forecast that usually sinks an airline stock. On Wednesday the stock climbed.
The company guided fourth-quarter adjusted earnings to $0.50 to $1.50 a share. If the fourth quarter lands at the top of that range, full-year adjusted earnings would be no more than $7.22, implied by the company's figures. Its prior full-year range, set in July, was $9.00 to $11.00. The new ceiling is $1.78 below the old floor, and it implies nine-month adjusted earnings of about $5.72.
The price of fuel
Chief Executive Scott Kirby said on the company's call that he expects fuel prices to remain elevated throughout 2027. Double-digit pretax margins next year would probably require lower fuel prices, slower growth in industry capacity or continued prioritization of fares over passenger load, he said, and the airline aims to recover additional fuel costs through revenue in 2027.
The company's fourth-quarter fuel assumption is about $4.80 a gallon, against a spot price for U.S. jet fuel of $4.77 on Tuesday, according to Argus. It expects fourth-quarter revenue growth of more than 20%.
The reversal
At 4:46 a.m. the stock was indicated lower by about 0.8%, but it was up 0.4% to 0.8% by 8:15 to 9:00 a.m., and up 3.3% by 9:50 a.m. and 4.3% in the 10:00 bar, all before the 10:30 a.m. call. The rest of the gain came between about 11:15 a.m. and 12:40 p.m., and at 1:46 p.m. it was at $104.61, up 7.00% from a close of $97.77, in a range of $96.26 to $104.85.
Part of that gain was shared. Delta rose 3.09%, American 3.63%, Southwest 2.55% and Alaska 2.40%. United's 7.00% outpaced each by more than three percentage points. Brent crude spent the day erasing a morning spike, which may have helped airlines. Nothing in the company's statements establishes what explains the extra gain.
Two readings
One reading is that investors looked past the reset. The ceiling on this year's earnings was lowered because of fuel, but fourth-quarter revenue is expected to grow more than 20%, the fuel assumption is close to spot, and a company that has already guided to the bad number may have little left to disappoint.
The other reading is that the reversal is mostly the sector's. Airline stocks rose together, oil eased, and nothing in the evidence separates United's extra gain from the sector's move.
What to watch
Jet fuel against the $4.80 assumption; Southwest's results after the close for a fuel read-across; fourth-quarter bookings; and industry capacity plans for 2027. A pretax margin in the double digits next year depends on conditions Kirby said the airline does not control.