United Airlines "gained ground" in key markets among its "frequent business road warrior travelers," with revenue from these customers up 11 percent year over year during the second quarter compared with total passenger revenue up 5 percent, United chief commercial officer Andrew Nocella said during a Thursday earnings call.
In addition, contracted business revenue was up 10 percent year over year for the quarter, Nocella said.
Though Nocella added that even though business revenue was recovered "roughly to 100 percent" to pre-pandemic levels, it was "far behind where it would be otherwise with a typical [gross domestic product] relationship." Further, the overall load factor contribution of corporate volume was down more than a few points compared with 2019, but there has been "slow but steady improvement," he said
When an analyst during the call asked if American Airlines' "backpedaling" on some of the changes to its distribution and corporate sales processes has affected United, Nocella replied that "we don't believe there was a sudden material or a significant windfall to United when American attempted to disintermediate travel agencies and force companies to book direct, so I don't think there will be a windfall as American flip-flops again to this side."
Nocella added that United has looked to maintain long-term partnerships with agencies and corporations. "What we did during this time period is we made sure that we put in long-term arrangements to gain long-term market share and make the corporations and the travel agencies more sticky to United," he said. "We'll see if that actually occurs."
Premium Strength
Consolidated premium revenue increased 8.5 percent year over year to $7.4 billion, with premium capacity up 9.1 percent, Nocella said, adding that the business load factor contribution in the Polaris cabin increased by 2.6 percentage points compared with Q2 2023.
"Demand for United's premium capacity, including Economy Plus, was strong in the quarter, outperforming non-premium seats," Nocella said.
In response to another analyst question about Alaska Airlines' Wednesday announcement that it will increase its premium seat offerings and reports that JetBlue might take a similar approach, Nocella said that "United is a premium business airline not because it's the latest fad, but because it's core to the hub system we operate from. It's no surprise that others are copying us. I think attempting to copy our segmentation plan when it's something that we've been implementing in earnest for more than seven years will be a challenge for anyone that does not operate from business center hubs."
United Q2 Metrics
United reported second-quarter passenger revenue of nearly $13.7 billion, up 5 percent year over year. Total revenue for the quarter was nearly $15 billion, up from $14.2 billion a year prior. Net income was more than $1.3 billion, up 23 percent from Q2 2023.
The carrier had Q2 passenger-revenue increases in each of its regions except the Middle East, India and Africa region, where it declined 35 percent year over year to $258 million. Its Pacific region increased 24 percent to nearly $1.4 billion, followed by Europe, which was up nearly 9 percent to more than $2.8 billion. Domestic passenger revenue was nearly $8 billion, up 3 percent from Q2 2023. Total international passenger revenue was up 8 percent to more than $5.7 billion.
Second-quarter capacity increased 8.3 percent year over year. Average fuel costs for the quarter were $2.76 per gallon.
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