The shockwaves of the Israeli-Palestinian conflict have arrived! Airlines are heavily impacted, oil prices surge, flights are suspended, and United Airlines plummets | Earnings Report

United Airlines announced its earnings report before the market opened on Tuesday, local time. Despite higher-than-expected revenue and adjusted earnings per share in the third quarter, the suspension of flights to Tel Aviv due to the Israeli-Palestinian conflict, coupled with rising aviation fuel prices, resulted in lower-than-expected performance guidance for the fourth quarter. After the earnings report was released, United Airlines' stock plummeted more than 8% during trading on the 18th.

According to the report, United Airlines' revenue in the third quarter was $14.88 billion, higher than analysts' expectations of $14.44 billion, and an increase from $12.88 billion in the same period last year. Net profit was $1.14 billion, with earnings per share of $3.42, compared to $942 million and earnings per share of $2.86 in the same period last year. Adjusted earnings per share were $3.65, higher than analysts' expectations of $3.35.

However, the performance guidance for the fourth quarter of United Airlines showed an adjusted earnings per share range of $1.50 to $1.80, lower than analysts' expectations of $2.06. In this situation, the projected adjusted earnings per share range for the full year is $9.55 to $9.85, lower than the company's July forecast of $11 to $12. Data shows that aviation fuel prices at major US airports have risen by nearly 25% since the summer.

Due to the Israeli-Palestinian conflict, major US airlines suspended flights to Israel earlier this month. Compared to other airlines operating services in Washington DC, Newark, New Jersey, and San Francisco, United Airlines has more flights to Israel, accounting for 2% of the company's total capacity.

After the earnings report was released, United Airlines' stock opened lower on the 18th and fell 8.06% during trading, hovering around $36.88.

Analysts from financial services company TD Cowen stated that United Airlines' fourth-quarter performance guidance was much worse than expected. "With the expectation that the Israeli-Palestinian conflict will be prolonged and the routes will not be restored within the year, we estimate that the company's fourth-quarter performance will be at the lower end of expectations."

In addition, United Airlines expects that if flights to Israel remain suspended for the rest of the year, its fourth-quarter revenue will increase by 9% compared to the same period last year. If the suspension only lasts until the end of October, revenue is expected to increase by 10.5% year-on-year.

At the same time, United Airlines stated that excluding fuel costs, other costs in the fourth quarter may increase by 3.5% to 5% compared to the same period last year. United Airlines CEO Scott Kirby said in a media interview that the increase in costs is mainly due to "labor costs rising more than anyone's expectations at the beginning of the year," and delays in aircraft deliveries and a shortage of air traffic controllers are also contributing factors.

Data shows that before the suspension of flights to Israel, revenue from international flights in the US this summer grew more than domestic flights, putting major airlines such as United Airlines and Delta Air Lines in a more favorable position than low-cost carriers that primarily operate domestic routes.