United Airlines reports mixed Q2 results as Newark disruptions weigh on profit margin

United Airlines (NASDAQ:UAL) shares are under modest selling pressure as a beat on the bottom-line was offset by a top-line miss and narrower profit margin.

The flight disruptions at Newark Liberty International Airport weighed on the company’s profit margin, with second quarter adjusted gross margin down 110 basis points to 11.0%.

For the reported quarter, United (NASDAQ:UAL) earned a profit of $3.87 per share, down from $4.14 in the same quarter last year, but 6 cents better than expected. Net revenue improved 1.7% to $15.24B, $100M shy of estimates.

The carrier’s metrics for the second quarter were also mixed. Premium passengers continue to fuel the bulk of the company’s growth, with premium cabin revenue up 5.6% year-over-year, versus a more modest 1.7% increase in basic economy. Overall domestic revenue, which includes both premium and basic, was down 0.7%.

Cost per available seat mile (CASM) increased 0.6% during the quarter, and increased 2.2% excluding fuel costs. While capacity was up 5.9%, total revenue per available seat mile (TRASM) fell 4% from a year ago.

Looking ahead to the current quarter, United (NASDAQ:UAL) expects the disruptions at Newark airport to continue to impact the company’s profitability with earnings expected to be between $2.25 to $2.75 per share, straddling the consensus estimate of $2.58 per share.

For FY25, the company expects to earn a profit of $9 to $11 per share vs $10.14 estimates. Last quarter, United (NASDAQ:UAL) issued two sets of guidance to assume both a recessionary and stable economic environment of $7 to $9 per share, and $11.50 to $13.50 per share, respectively.

United’s (UAL) disappointing results are weighing on names within the airline sector, with Delta Air Lines (DAL) down 0.4%, American Airlines (AAL) fractionally lower, and JetBlue (JBLU) down 1.3% in after-hours trading. The U.S. Global Jets ETF (JETS) is 0.2% in the red.