United Airlines second-quarter passenger revenue declined
6.6 percent year over year due in part to continued travel cuts from the energy
sector, though executives noted those cuts are becoming less severe.
Passenger revenue totaled $8.1 billion, down from $8.7
billion in the second quarter of 2015. The strong U.S. dollar, lower surcharges
and growing industry capacity added to the energy sector's affect on revenue,
the carrier reported. "Corporate travel bookings in the second quarter
were essentially flat, with revenue down approximately 3 percent as corporate
yields continue to be under pressure," United vice chairman and chief
revenue office Jim Compton said during an earnings call. "We have seen
capacity grow faster than demand, which puts pressure on yields, and corporate
demand is not growing at that pace."
While the energy sector, hurting from lower fuel prices, has
been a drag on United's revenue for the past several quarters, it now "is
decelerating at a slower rate," Compton added.
Similar to Delta
Air Lines' announcement a week prior, United is trimming back capacity
growth for this year. It's cutting transatlantic capacity by as much as 2
percent and Latin American capacity by as much as 10 percent. Compton said the
carrier is "closely evaluating" its capacity plans for next year. In
a research note, Cowen & Co. wrote, "Management will likely take a
conservative approach to growth in 2017 given global economic
uncertainty."
During the second quarter, United increased capacity 0.1
percent year over year as traffic dipped 0.5 percent. The carrier's load factor
declined 0.4 percentage points to 83.5 percent.
In terms of operations, the quarter was a strong one for
United. On-time performance rose 11 percentage points year over year, and the
carrier ranked either first or second among the four largest U.S. carriers each
month, according to United. The past six months also have been United's
all-time best for both on-time arrivals and baggage handling, president and CEO
Oscar Munoz said in the earnings call. "We are now consistently performing
at the level that we and our customers expect of us," he said. "Our
focus has shifted to maintaining this level of reliability while doing so more
efficiently."
United reported a net income of $588 million in
the second quarter, down from $1.2 billion a year prior.