United Airlines Holdings (UAL 0.38%) has not seen bookings drop off now that summer is over. Investors worried about what the next few months might bring were relieved, sending United shares up 5.5% on Wednesday.
Airline stocks had a turbulent summer, with strong demand providing a much-needed boost to revenue but higher fuel and labor costs eating into profitability. Most of that higher demand was for leisure travel, and with corporations facing higher expenses due to rising inflation, there has been some reason for concern that now that Labor Day is behind us, demand could fall substantially.
But United is seeing no sign of a slowdown. The airline in a regulatory filing said that "exiting a robust summer, the company continues to see a strong demand environment." United is now forecasting third-quarter operating revenue to be 12% higher than it was in 2019, pre-pandemic, and better than its previous up 11% estimate.
United is forecasting an operating margin of about 10.5% in the quarter, up from previous guidance for a 10% operating margin. With costs holding steady and more flights being flown to meet demand, the airline is able to spread its cost over more available seats.
United is on the hunt for further opportunities to expand. The airline, according to Bloomberg, has threatened to suspend its meager service at New York's John F. Kennedy International Airport if federal regulators do not allow the carrier to add more flights there.
The airlines have been fighting near-constant headwinds since the onset of the pandemic, and it will likely take until 2024 at the earliest for business travel to fully recover and for the industry to normalize operations.
In the meantime, all investors can do is look for signs indicating whether conditions are improving or eroding. On Wednesday, United gave a clear indication there is no reason to hit the panic button.