U.S. and European carriers saw their shares move lower on Wednesday after United Airlines (NASDAQ:UAL) flagged the impact of the suspension of flights to Tel Aviv due to the Israel-Hamas conflict.
United shares fell 5% on weak guidance while American Airlines (NASDAQ:AAL) stock lost 1.5%. Delta Air (NYSE:DAL) stock fell 1.1%.
United revised its fourth-quarter profit projections, and the outlook falls short of analysts' expectations. The company anticipates an adjusted profit of $1.80 per share if flights to Tel Aviv remain grounded through October 31.
However, if the ban persists through the end of 2023, the projected profit drops to $1.50 per share. This stands in contrast to the average estimate of $2.10 per share from analysts.
Furthermore, United Airlines is grappling with increased jet fuel costs, adding to its financial challenges.
“While the airline sector has been a challenging space for equity investors this year, we see relative value in UAL shares given the company’s global exposure and management ambitions to deliver improved long-term profitability,” analysts at Barclays wrote in a note.