In what felt like déjà vu, United Airlines chief commercial officer Andrew Nocella on a Thursday earnings call said that the carrier is "far less reliant today on contracted corporate business, and that business has been clearly slow to return."
That mirrors a sentiment that American Airlines for multiple quarters has expressed, one which it essentially reiterated on its own earnings call a few hours earlier.
Still, Nocella noted that just because contracted corporate business has been slow to return, that doesn't mean it won't. "If it does, the legacy business model will benefit the most," he said.
And yet, Nocella echoed its competitor when he said that New Distribution Capability technology is changing distribution, adding that passengers want more flexibility in when and how they travel and "are increasingly preferring to work directly with United on our industry-leading app."
"More and more, individual corporate customers pick the airlines they want to fly on versus the purchasing manager at their business' recommendation," he said.
Business Recovery
Overall, the recovery of the business segment remained stable, Nocella said. Revenue from international business travelers increased 40 percent year over year, with 10 percent growth from domestic business travelers.
"On a ticketed basis, business travel revenue continues to trend roughly flat to 2019," Nocella said.
June Travel Disruptions
United CEO Scott Kirby kicked off the call with comments regarding the "operational challenges" at Newark Liberty International Airport at the end of June due to weather conditions and air traffic control shortages. Several carriers experienced cancellations, but among the three largest U.S. carriers none experienced more than United, and for longer.
"We are now doing more than ever to mitigate the impact of weather, congestion and other infrastructure constraints at Newark, and frankly, to build a schedule at Newark [that] is more manageable given the frequency of weather events and the very real operating constraints that exist there even on [a] blue-sky day," Kirby said. "We've already started to improve the working experience for our people and travel experience for our customers."
The carrier shared five changes it is making to mitigate the risk of another occurrence. The airline has cut its summer schedule from Newark from its historical number of about 435 flights per day to 410, and will cut again in August to about 390, Nocella said.
United also expects to have six additional gates in Terminal A, two of which will accommodate widebody aircraft, United president Brett Hart said, adding that the carrier also is adjusting its schedules to increase its out-and-back flying to "limit the downline system impact of any cancellations or delays."
The airline also is "increasing its resources in crew scheduling" and accelerating the timeline of technology enhancements and automation. "Lastly and importantly, our partnerships with the [Federal Aviation Administration] and Port Authority [of New York and New Jersey] are essential to the airline's success," Hart said. "Collaboration and communication amongst these groups has never been stronger."
United Q2 Metrics
United reported second-quarter revenue of $14.2 billion, of which $13 billion was passenger revenue, representing year-over-year increases of 17.1 percent and 20.1 percent, respectively. Domestic revenue was up 7.8 percent year over year to $7.7 billion. International revenue increased 44 percent during the same period to $5.3 billion.
Net income was $1.1 billion, up from $329 million reported a year prior.
Quarterly capacity increased 17.5 percent year over year, with domestic capacity up 10.5 percent and international up 27.2 percent.
Average second-quarter fuel costs were $2.66 per gallon.
United's guidance included capacity increases of about 16 percent year over year for the third quarter, and about 18 percent for full-year 2023. Operating revenue for the third quarter is projected to be 10 percent to 13 percent higher than a year prior. The average fuel price is estimated to be $2.50 2.80 per gallon.
June was the company's highest month for new members enrolling in the MileagePlus program, at approximately 800,000.
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