DALLAS - Chicago-based legacy carrier United Airlines (UA) has reported revenues of US$12.88bn for the third-quarter ending September 30, 2022. Revenues were 13% above pre-pandemic levels, and the carrier expects its adjusted operating margin to exceed 2019 levels for the first time in the fourth quarter.

The surge in revenues was a result of a more than US$5bn increase in the same quarter last year and US$1.5bn more than the same period in 2019, beating analysts' expectations.

The higher revenues were achieved whilst passenger throughput was still 10% below 2019 levels but had a load factor a point higher at 87.1%. Operating profit was recorded at $1.46bn, which is slightly lower than the 2019 Q3 record of $1.47bn.

Net profit, on the other hand, was down by 8% when compared to the same quarter in 2019. ( $942 m in Q3 2022). The airline's current fourth-quarter operating margin prediction is approximately 10%— exceeding pre-pandemic levels for the first time.

The Star Alliance member's shares (UAL) were up more than 5% in premarket trading on Wednesday. Adjusting for one-time items, UA earned US$2.81 per share, exceeding the US$2.28 polled expectation by analysts at Refinitiv.

The carrier further stated that it expects to record an adjusted per share (EPS) of $2.25 for the last quarter of the year, ahead of analysts' estimates of a mere 98 cents. Higher EPS indicates better profitability, so with the airline's EPS topping estimates for the third quarter and predictions of beating estimates again in the fourth, UA is signaling resilience during the current economic climate.

High Passenger Demand as the Key Element

Airlines worldwide rode this year's passenger demand surge that reached pre-pandemic levels in the summer season. Many US carriers have reported similar upbeat third-quarter reports. In fact, just last week, Delta Airlines ( DL) reported record revenue for Q3 and predicted another profit for the fourth quarter.

According to United's CEO Scott Kirby, flexible workplaces are altering passengers' travel patterns that enable airlines to combat a slowing economy.

In an interview with CNBC's "Squawk box" Kirby said, "Hybrid work allows every weekend to be a holiday weekend," He also expressed that remote work allows travelers to fly on days they previously would be tethered around a desk in the pre-pandemic world. It wasn’t money that constrained people from travel. It was time, they’re untethered from the desk.”

Airlines are still facing supply chain problems (late aircraft deliveries) that limit the number of flights they can offer, along with the current labor plight, particularly the pilot shortage.

The limited supply of flights is holding airfare high. United revealed that its third-quarter revenue per available seat mile was up more than 25% from 2019. For the current quarter, the airline expects this metric to be as much as the level recorded in 2019. Fourth-quarter capacity is also expected to be down by 10% similar to the previous quarter.

Despite, high airfare, increased inflation, and other macroeconomic variables of concern, passenger travel shows no signal of slowing down. Therefore, UA is on its way to ending 2022 in good standing.

Featured image: United Airlines N25982 Boeing 787-9 Dreamliner. Photo: Luke Ayers/Airways