United Airlines has downgraded its third-quarter revenue expectations
in the wake of Hurricane Harvey.
In a Securities and Exchange Commission filing, the carrier
estimated that pretax profit margins would be 8% to 10% in the third quarter,
down from its earlier estimate of 12.5% to 14.5%.
Meanwhile, United now expects passenger revenue per
available seat mile (PRASM), a key airline performance metric, to be down 3% to
5% year-over-year. The carrier’s earlier guidance was for PRASM to be between
1% up and 1% down in the third quarter.
The National Weather Service said Harvey dropped 31 inches
of rain on Bush Intercontinental Airport and larger totals on Houston Hobby and
other parts of the Houston metroplex. The storm forced the closure of Bush,
United’s second-largest hub, for four days in late August. During that time, the
carrier cancelled 7,400 flights.
United resumed partial operations in Houston on Sept. 1 and
expects the to be fully operational there by the end of the week.
The financial impact of Harvey could nevertheless spill into
the fall quarter, the carrier said, because of depressed local demand.
Along with Harvey, United said that geopolitical tensions on
the Korean Peninsula, uncompetitive pricing of its new Basic Economy product
and higher fuel costs have also dampened third-quarter expectations. The
carrier expects third-quarter fuel costs to be $1.72 to $1.77 per gallon, up
from the earlier expectation of $1.56 to $1.61 per gallon.