United Raises Q3 Profit Margin Forecast

October 9, 2015

United Airlines expects a higher pre-tax profit margin for the just-ended third quarter than it had previously forecast, due in part to extra revenue from a credit card agreement for frequent fliers.

United said its pre-tax margin will be between 16 and 17 percent, compared with a prior forecast of between 13.5 and 15.5 percent, excluding special charges. That reflects about USD$100 million in revenue from changes to marketing agreements with Chase Bank and Visa's US subsidiary.

United also narrowed its outlook for a decline in passenger unit revenue, seeing a decline between 5.5 and 6 percent, compared with prior guidance of a drop between 5 and 7 percent.

Delta Air Lines reported a similar improvement last week, suggesting that US airlines may start to emerge from a months-long unit-revenue slump. A strong dollar has lowered demand from visitors from outside the United States, and smaller surcharges in international markets have decreased the value of sales.

United said it cancelled fewer flights in the quarter than it had anticipated, resulting in a 2.1-percent capacity increase from a year earlier. It had forecast capacity would rise between 1.25 and 2.25 percent.

(Reuters)