United Airlines (UAL) shares powered higher Tuesday, while rival U.S. carriers posted solid gains, after the group said bookings and traffic has improved notably since the start of the year amid the easing of pandemic era restricts on business and travel.
In an investor presentation ahead of the J.P. Morgan Industrials Conference in New York, United noted, however, that overall capacity this year would still be down in the "high single digits" when compared to 2019 levels, citing the recent surge in jet fuel costs linked to the ongoing volatility in global crude markets, as well as aircraft delivery delays tied to Boeing's (BA) issues with its 787 Dreamliner.
Boeing cautioned in October that charges linked to its delayed 787 Dreamliner could reach $1 billion this year, after earlier saying it would trim production of the aircraft as a result of the fuselage issues.
United also said it sees jet fuel costs of around $2.99 per gallon in the first quarter, up 19% from its January forecast, and $3.50 in the second, a figure that is nearly double last year's levels.
"In the period following the peak in COVID-19 case counts associated with the Omicron variant in January 2022, demand for travel has exceeded the Company's previous expectations," United Airlines said in an update filed with the U.S. Securities and Exchange Commission.
"System bookings for future travel have improved close to 40 points since the first week of 2022 and business traffic has increased more than 30 points since the peak of the Omicron impact in January 2022," the carrier added. "The Company now expects first quarter 2022 total operating revenue to be near the better end of previous guidance of down between 20% and 25% versus first quarter 2019 (and) continues to expect positive adjusted pre-tax income in second quarter 2022."
United Airlines shares were marked 7.8% higher in early Tuesday trading to change hands at $37.76 each, a move that would still leave the stock with a year-to-date decline of around 17%.
Delta Air Lines (DAL) shares, meanwhile, jumped 7.44% after is boosted its current quarter revenue forecast to be about 78% of pre-pandemic levels, up from its prior estimate of between 72% and 76%.
Delta said its fuel costs would average $2.80 per gallon in the first quarter, up from its January forecast of between $2.35 and $2.50.
Southwest Airlines (LUV) shares were up 6.3% at $42.63 each after it lowered its estimate for revenue declines from 2019 levels to around 8% to 10%. The group had previously forecast a fall of between 10% and 15%.
American Airlines (AAL) gained 8.2% after it trimmed its revenue decline forecast to around 17% from 2019 levels, compared to its prior forecast of between 20% and 22%.
