United tops profit estimates as MAX woes prompt higher fares

United Tuesday reported a bigger-than-expected increase in Q2 profit, driven by strong air travel demand and the ability to charge more for seats after the grounding of Boeing’s 737 MAX reduced capacity. The three US airlines that operate the MAX - United, American Airlines and Southwest - are cancelling thousands of flights each month since a worldwide grounding in March following crashes in Ethiopia and Indonesia that killed a total of 346 people. United said net income rose 54% to $1.05b, or $4.02 per share, in the quarter ended June 30 from $683m or $2.48 per share a year earlier. On an adjusted basis, the airline earned $4.21 per share for the quarter. Analysts on average expected a profit of $4.08 per share. The air carrier is in the midst of a three-year plan to claw back domestic market share from rivals by building up connections through its main US hubs, including Chicago, New York and San Francisco, cities that attract lots of travellers willing to fly first-class and business-class. Citing continued strong demand, United lifted its 2019 adjusted diluted earnings per share guidance to $10.5-$12.0 versus $10.0-$12.0 previously. Still, the earnings per share growth for the year is expected to be slower than in 2018 due to the MAX grounding and closed Pakistani air space, which forced United to cut its 2019 capacity growth target for a second time this year. It now expects capacity to increase between 3% and 4%, versus an original forecast of 4%-6% growth.<br/>