Major US carrier United Airlines’ profits increased 23% to $1.32 billion during the second quarter, driven by diverse revenue sources and what it expects to be the “best unit revenue performance” among its major airline peers.
That compares with profits of $1.08 billion during the three months ending 30 June last year.
Chicago-based United disclosed its quarterly earnings on 17 July, reporting second-quarter revenue of $13.7 billion, an increase of more than 5% relative to its prior-year total of $13 billion.
The carrier cites “key revenue diversity advantages” including “premium revenue, basic economy revenue and market share shift among domestic road warriors” as momentum-drivers. Revenue generated from premium seating grew 8.5% year on year, while basic economy revenue increased 38%.
It expects those factors to accelerate further growth in the second half of 2024.
“The revenue diversity advantages that we’ve built with our premium customers, basic economy customers and domestic road warriors… have propelled our margins to near the top of the industry,” says chief executive Scott Kirby.
Kirby has previously noted that, since eliminating change fees, United has been poaching some of Southwest Airlines’ core customers – so-called “road warriors” who travel frequently for work and value flexible itineraries.
United’s leadership believes mid-August will represent an “inflection point when industry-wide oversupply” of passenger capacity will ease, adding that it is “best positioned to benefit” from that anticipated change.
“We see multiple airlines have begun to cancel loss-making capacity, and we expect leading unit revenue performance among our largest peers in the second half of the third quarter,” Kirby says. “United has long been preparing for the moment when industry-wide domestic capacity would adjust. It’s now clear that inflection point is just 30 days away.”
Ultra-low-cost carrier Spirit Airlines recently lowered its revenue forecast for the second quarter as non-ticket revenue slipped below anticipated levels. It now expects to post an adjusted operating loss of $130-143 million during the period.
Dallas-based Southwest also lowered its expectations ahead of its earning call, pointing on 26 June to struggles ”driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment”.
Rival major carrier Delta Air Lines, the first to disclose results for the period ending 30 June, reported that its profit declined 29% year on year to $1.3 billion. It cited an oversupplied domestic market for the downturn.
United, meanwhile, appears to be in a strong position – especially relative to US discount carriers. Its second-quarter capacity increased more than 8% compared with the same period of 2023, as it flew 44.4 million passengers, a company record for the three months ending 30 June.
Looking ahead, United has reduced its expected domestic capacity by about 3% in the fourth quarter, “reflecting the airline’s firm commitment to taking its own action to adjust to current trends”.
United ended the period with a fleet of 1,369 aircraft, an increase of more than 3% from the 1,325 jets in its fleet on 30 June last year.
