After a slower-than-expected start to 2025, with "demand weak for the last five months due to high levels of uncertainty for both businesses and consumers," United Airlines executives on a Thursday morning earnings call a noted a sharp turnaround the past few weeks.
"The level of uncertainty has declined. The tax situation is settled after the reconciliation bill passed. The geopolitical situation in the Middle East appears to have stabilized," United CEO Scott Kirby said. "And while tariffs are not yet certain, I think the market and most businesses have a much better read on how they'll manage in a narrow range of outcomes."
The result of these recent changes, including the signing of the Trump administration's major spending legislation, has been an increase in travel demand, executives said.
"This step-up is a six-point positive swing in sales to date in July versus the second quarter, but even more importantly, a double-digit swing in higher-yielding business revenues in the same period," United chief commercial officer Andrew Nocella said, adding that the rebound has been "across the board" in terms of hubs and verticals.
Even though business demand has rebounded, "it's not all the way back, but it has certainly inflected in a positive direction," Kirby added. "My read of the economy and talking to other CEOs and watching the data is that the economy hit a turning point, did hit an inflection point at the end of June, and I expect that to continue."
The carrier, taking into consideration increased business traffic along with its view of published schedules, overall demand and recent yields, anticipates a "great setup" for the fourth quarter, Nocella said.
Meanwhile, the second-quarter challenges faced at Newark Liberty International Airport—including IT outages coupled with runway construction—that resulted in lower demand and capacity reductions spurred a 1.2 percentage-point negative effect on Q2 margins, United chief operating officer Torbjorn Enqvist said. "We expect the impact will linger into Q3 with an approximately one-point margin impact."
However, the carrier has "seen a dramatic turnaround in Newark," Enqvist added, with bookings largely recovered, and the carrier does not expect an effect on margins in the fourth quarter.
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United Q2 Metrics
United reported second-quarter passenger revenue of more than $13.8 billion, a 1.1 percent increase year over year. Total revenue rose 1.7 percent to more than $15.2 billion. Net income for the quarter was $973 million, down from the more than $1.3 billion reported a year prior.
Second-quarter capacity increased 5.9 percent year over year, but the carrier expects a leveling off of additional capacity in the third quarter. United did not provide specific guidance, but Nocella noted that a few months ago, published industrywide domestic capacity for August and September indicated a 4 percent increase year over year. Now, a slight decline in year-over-year capacity is projected for that period, he said.
The Q2 average fuel price was $2.34 per gallon.
RELATED: United Q1 performance