The airline sector The earnings season got off to a strong start last week if Delta Airlines Inc. DAL provided an upbeat forecast as business travel and outbound travel regained momentum in the third quarter.
That’s what investors expect United Airlines Holdings Inc. UALwhich reports earnings on October 18 will continue the trend with upbeat forecasts and strong sales.
The street says: Analysts are forecasting earnings to rise to $2.26 per share from a loss of $1.02 per share a year ago. Revenue is expected to increase 65% to $12.7 billion.
For more analyst ratings and news, visit United’s ratings page.
Increased demand for air travel as a result of the easing of COVID-related restrictions in the September quarter could boost United’s revenue performance.
Passenger revenue, which accounts for the majority of revenue, is likely to have increased significantly compared to the previous quarter due to the positive passenger numbers.
The Labor Day holiday falling in the quarter is likely to boost air traffic even further.
However, inflationary pressures on per-gallon fuel prices are likely to weigh on bottom line results in the third quarter. According to UAL, the average price of jet fuel per gallon will be $3.83 in the third quarter, up from the $3.81 reported in the third quarter of 2021.
Options traders, particularly those holding short-term calls or puts, take on additional risk as the institutions writing the options increase premiums to account for implied volatility.
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For options traders with weekly calls to take advantage of United Airlines’ potential rise or fall to new lows, the stock needs to move more than 7.98%, which is the implied move institutions have priced into the calls and puts , which expire this Friday.
If United Airlines reacts less strongly, the premiums will fall on Tuesday and the options are likely to expire worthless.