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Oscar Munoz, chief executive officer of United Continental Holdings
Shares of United Continental fell almost 4 percent in the premarket Wednesday after the airline gave third-quarter guidance that implied it may miss Wall Street’s earnings estimates for the period.
The airline said it expects revenue per available seat mile (RASM) — a key metric for airlines — to range between a 1 percent decline and 1 percent growth.
“[W]e believe few were braced for a -1% to +1% outcome, which (obviously) once again raises the specter of declining RASM,” JPMorgan analyst Jamie Baker said in a note Tuesday.
“But even allowing for potential conservatism, the more likely outcome in our minds is a modest softening of consensus earnings expectations,” Baker said.
United said it sees its pretax margins of 12.5 to 14.5 percent for the third quarter, which implies earnings per share of $2.73 to $3.13. Wall Street analysts were expecting a bottom-line guidance of $3.16.
Baker said the range’s midpoint of $2.93 “falls below all but one of the seventeen published forecasts – though United does have a tendency to establish initial guidance that it has recently been prone to exceed.”
United CEO Oscar Munoz told CNBC’s “Squawk Box” on Wednesday that the airline is “firmly on the right path and a quarter does not make a difference.”
The airline released its third-quarter guidance Tuesday afternoon along with its second-quarter results. United posted earnings per share of $2.75 on revenue of $10 billion, topping Wall Street expectations.