United capacity cuts focus on Atlantic market in Q3

Washington DC
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United Airlines will shrink capacity by 0.7% to 1.7% in the third quarter compared to a year earlier, driven by a decline in Atlantic capacity.

The Chicago-based carrier will cut Atlantic capacity by 2.7% to 3.7% year-on-year during the period, according to an investor update released today. Domestic capacity will also be down while it will rise by 0.9% to 1.9% in the Pacific during the quarter.

Capacity shrank by 0.6% year-on-year during the second quarter, led by a 4.1% decline in the Atlantic.

Full year capacity guidance remains unchanged at down 0.5% to 1.5% year-on-year, says Jim Compton, chief revenue officer at United, in an earnings call today.

John Rainey, chief financial officer of United, adds that the airline has a "downward bias" on capacity in the second half, during the call.

Unit revenue is expected to be flat in July compared to the same month last year, says Compton.

Costs per available seat mile are expected to rise by 3% to 4% year-on-year in the third quarter, according to the update.

United anticipates that it will pay an average of $3.13 per gallon for fuel in the third quarter, says Rainey. It paid an average of $3.29 per gallon during the second quarter.

The airline expects that its average price of fuel will be $3.22 per gallon for the full year, says Rainey.