Despite citing a "softer macroeconomic environment," "volatility in the market," "softer demand for travel" and a "weakening environment" on a Wednesday morning earnings call, United Airlines executives also suggested bookings had stabilized and revenue targets remained in reach.
"If the environment remains relatively weaker but stable, we can stay within our full-year guidance range," United CEO Scott Kirby said during the call.
Kirby, however, added that "we read the same headlines as you, and so we think that there is a reasonable chance that bookings could weaken from here."
Still, after making what United chief commercial officer Andrew Nocella called "revenue management changes" about six weeks ago, "bookings have stabilized, and we are currently booked ahead of last year at this same point in time by one point."
What weakness United did see was "magnified on off-peak flights," Nocella added, noting that the revenue gap on domestic flights departing prior to 7 a.m. or after 8 p.m. is usually 30 percent lower than others, but in the first quarter, that gap was 40 percent lower. "That's why we are canceling more off-peak flying and lower utilization going forward."
In addition, business traffic trends from the late fourth quarter and into early 2025 have moderated. "Flown business revenue grew 7 percent in Q1 year over year versus 15 percent in Q4," Nocella said. "Contracted business sales for all future travel are currently up low single-digits year over year," which he said had moderated from being "up double-digits at the start of the year."
The carrier plans 2 percent less utilization of its narrowbody aircraft in the coming quarters, basically lowering domestic capacity by two points, Nocella said. "In the last few weeks, we have reduced domestic capacity for the summer in our sell-in schedule by three points with one more point to be removed shortly," he added.
United CFO Mike Leskinen said that the carrier also has reduced capacity in U.S. government traffic-heavy routes and transborder routes, and is being "very diligent about expenses." Further, a "significant reduction in our fuel cost" is an anticipated benefit.
Whether there will be any further adjustments to capacity or schedules remains to be seen.
"Fourth-quarter domestic schedules are still being developed, and we will look to see if more significant changes are needed," Nocella said. "The international environment is also strong for United, and we believe it looks good for Q2 as of now. The makeup of our international traffic skews heavily towards U.S. point-of-origin business. While most of our international travel demand is U.S.-based, we are seeing modest declines in non-U.S. origin passenger volumes."
United Q1 Metrics
United reported record first-quarter passenger revenue of $11.86 billion, an increase of 4.8 percent year over year, on total revenue of $13.21 billion, representing a 5.4 percent increase compared with Q1 2024. Net income was $387 million compared with a loss of $124 million one year prior.
International passenger revenue increased 6.4 percent year over year during the quarter, while domestic passenger revenue was up 3.8 percent. The Pacific region had the highest level of growth for the quarter, at 8.9 percent.
First-quarter capacity increased 4.9 percent year over year. The average fuel price was $2.53 per gallon.
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