Published - October 19, 2022 @ 5:34 PM (EET)

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With consumer appetite for travel showing no signs of slowing down despite a run-up in ticket prices, United Airlines (NASDAQ:UAL) said Tuesday it expects its operating profit margin to surpass pre-pandemic levels in the final quarter of 2022.

Executives at United, which reported third-quarter results Tuesday, said that travel demand, including leisure trips, has held up into the fall, while corporate travel is also starting to rebound.

Adjusted earnings for the quarter came in at $2.81 a share, and revenue rose 13.2% to $12.88 billion, above estimates of $12.72 billion.  The company also earned a profit of $942 million, nearly double what it brought in a year earlier.

CEO Scott Kirby of the Chicago-based carrier said,

"Despite growing concerns about an economic slowdown, the ongoing Covid recovery trends at United continue to prevail."

Elsewhere, increased hiring and training for new workers due to delayed plane deliveries and backlogs have curbed the airlines' growth as it limited the supply of seats.  

United anticipates the constraints on growth in the industry could last for years and that post-Covid recovery in demand and more flexible working arrangements that allow for more travel are durable trends.

The carrier will continue to hold flying capacity as much as 10% below 2019 levels while operating levels for the full year will be 13% below pre-pandemic.

Shares of United climbed over 7% in after-hours trading Tuesday.  The carrier was the US's second-largest to report quarterly results and will be followed by American on Thursday.

PRICE TARGET:  Based on 11 Analyst ratings covered by TipRanks over the last three months, the consensus on the stock is a Moderate Buy (7 Buys, 3 Holds, 1 Sell).  The average price target of $50.64 implies an upside potential of 27.49%.

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