A plane takes off from O’Hare International Airport in Chicago, Illinois on January 18, 2022.
Scott Olson | Getty Images
United Airlines hit a key earnings milestone in its recovery from the pandemic on Wednesday, but said it will scale back its growth plans to 2023.
United reported its first quarterly profit — $329 million — since the start of the Covid-19 pandemic without the help of federal payroll, which expired nearly a year ago.
Unit revenues rose 24% in the second quarter from 2019, even at skyrocketing prices, thanks to strong travel demand, while unit costs excluding fuel rose 17% compared to the April-June period three years ago. Fuel costs also rose.
“It’s nice to be back in the black – but we have to face three risks that could grow over the next 6 to 18 months,” United CEO Scott Kirby said in an earnings release. “Industry-wide operational challenges that are limiting the capacity of the system, record high fuel prices and the increasing likelihood of a global recession are real challenges we are already addressing.”
The Chicago-based carrier estimated its third-quarter capacity would be 85% that of the same quarter of 2019, and fourth-quarter capacity would be 90% restored compared to three years ago, before the pandemic impacted travel — a relative conservative plan as it aims to trim flying to become more reliable.
Competing airlines Delta, Southwest, JetBlue and others recently cut their flight schedules.
Next year, United plans to expand air travel by no more than 8% from 2019, versus a previous forecast of 20% growth.
Shares fell 6% in after-hours trading after the airline reported results.
Here’s how United performed in the second quarter versus Wall Street expectations, based on average estimates compiled by Refinitiv:
- Adjusted loss per share: $1.43 vs. $1.95 expected.
- Total sales: $12.11 billion versus $12.16 billion expected.
United’s report comes a week after Delta reported a jump in revenue in the second quarter and forecast sustained travel demand through the end of the summer peak season. American Airlines releases its second-quarter results and third-quarter guidance before the market opens on Thursday.
The costs, including a rise in fuel prices from last year, continue to weigh on the bottom line of airlines trying to work their way out of the pandemic.
United said it expects unit costs excluding fuel to remain high this year, up 16 percent to 17 percent in the third quarter and about 14 percent in the fourth from three years earlier.
United executives will host a conference call with analysts and media representatives Thursday at 10:30 a.m. ET.