The stocks of major airlines including United Continental Holdings Inc. have been soaring in spite of customer scandals that were expected to hurt business, according to The Financial Times. These companies have been providing optimistic forecasts for their financial performance as of late. (For more, see also: 3 Best Airline ETFs for 2017.)
In addition, airline stocks enjoyed some tailwinds earlier this month after American predicted that unit revenue, a metric that is based on sales and available flight capacity, would climb between 5% and 6% during the second quarter, an increase from the prior estimate, Reuters reported. As U.S. economic fundamentals continue to strengthen, airline companies have been benefiting from dwindling capacity.
In addition to upgrading this measure of revenue per available seat mile, American increased its outlook for second-quarter pre-tax margin to between 13% and 14%, up from the prior estimate of 12% to 14%, The Financial Times reported. United, which has been making efforts to improve its image after a customer violent customer incident earlier this year, recently predicted that its second-quarter consolidated passenger unit revenue would rise 2% from the year before.
United also upgraded its margin guidance, raising it from 10% to 12% to between 12.5% and 13.5%, according to The Financial Times. Based on this information, UBS Group AG (USA) analysts predicted that the company’s second-quarter earnings per share will be between $2.60 and $2.80. Both of these figures would surpass the market consensus of $2.31 and UBS’ prediction of $2.44.