United shares surge more than 8% after airline raises outlook

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United has trimmed its plan to grow capacity for the year to no more than 5 percent, down from the 5.5 percent expansion it forecast in April. While not a dramatic cut, investors are looking for airlines to rein in growth as fuel becomes more expensive.

United said it’s offsetting 75 percent of its higher fuel costs mainly by charging more for each seat it flies a mile, a key measure of performance, the company said in a presentation Wednesday. Fuel is the airline’s second-largest expense after labor.

United posted adjusted second-quarter profits and revenue that topped Wall Street analysts’ expectations after the markets closed Tuesday.

But the company’s sunnier outlook for the year appears to have calmed some investor worries. The airline expects to earn a full-year per-share profit of between $7.25 and $8.75, up from an estimate in April of $7.00 to $8.50. Its shares reached an intraday high of $78.65 around 10 a.m.

Delta Air Lines cut its profit outlook for the year last week. Its shares are down 6 percent so far this year.

The focus shifts to challenges at American Airlines when the world’s largest carrier reports second-quarter earnings on July 26. American’s shares tumbled more than 8 percent last week after it trimmed its revenue outlook, citing weakness in the domestic market. American’s shares are off close to 30 percent this year.

United executives are speaking with industry analysts on a call on Wednesday morning.



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