United Airlines (NYSE: UAL) was among the lowest performers today, ending the day down 9.7% after reporting earnings but the negative outcome was due to forward looking projections. Although the company beat projected earnings estimates, $3.65 per share or $14.48 billion for the quarter, and saw top line revenues jump 12.5% year-over-year, the stock took it on the chin due to too much uncertainty in the near future.
What’s Going On With United Airlines Stock
As mentioned, 3rd-quarter results beat analyst expectations, but near term uncertainty, particularly in Q4 has investors hesitant about the stock today. The conflict in the Middle East could force United to divert flights to Israel, which United has a larger exposure as the largest airline carrier to the Israel of any U.S. airlines. Currently 2% of United’s total capacity goes to the country and UAL has stated if flights are cancelled, they would likely hit the lower end of 4th quarter earnings.
But the Middle East Conflict is not the only headwind they are facing. Fuel prices continued to soar for all US airline carriers, with prices soaring 25% since the beginning of the summer.
What Does This Mean For United Airlines Stock?
Short term uncertainty and even outlook revisions over the short term shouldn’t be a concern for most investors, especially if your optimal holding period is a few to several years. Also, fuel price uncertainty is typically a very short term impact for airlines as they typically pass the price increase to consumers. Additionally, Executives at United still anticipate a 9% year-over-year increase if Israel flights are suspended for the quarter.
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