United Airlines turned in strong first-quarter results but holds a less optimistic view of the year’s second half, as US airlines increasingly appear destined for a period of sagging growth.
In response to slowing demand, United plans to cut four percentage points of domestic passenger capacity from its network starting in the third quarter, it disclosed on 15 April.
United’s plan to pull back capacity is the latest evidence suggesting that US carriers are bracing for a period of economic contraction, with Delta Air Lines earlier this month reporting that growth is “largely stalled” and low-cost carrier Frontier Airlines also lowering its full-year financial expectations.
However, Chicago-headquartered United Airlines carrier touts its “resilient” first-quarter earnings amid a “challenging macro-economic environment”. Chief executive Scott Kirby ties United’s recent performances to the plan it adopted during the Covid-19 pandemic.
“United Next is on track and we will continue to execute our multi-year plan that has allowed United to thrive in any demand environment,” he says. ”It has given us industry-leading margins in the good times and we expect to expand our lead further in challenging economic times.”
United reports first-quarter profits of $387 million, compared with a loss of $124 million during the January-March period of 2024.
The company’s first-quarter revenue rose 5.4% year on year, to $13.2 billion.
United characterises the first three months of the year as “the best first-quarter financial results in the past five years”.
Demand for United’s international flights remained robust in the first quarter, with revenue per available seat kilometre increasing 4.7% for transatlantic flights and 8.5% for the Asia-Pacific region.
Selling premium seats continued to be a strength, as United says revenue from that segment increased more than 9% over the prior-year period, while revenue from its business segment rose 7.4%
But United’s momentum will slow in the third quarter, when it will trim passenger capacity from its domestic network.
The carrier says that it is making ”prudent adjustments to the utilisation rate of its fleet, including ongoing reductions in off-peak flying on lower demand days”. It expects to continue developing this approach into the fourth quarter.
Like rival Delta, United is planning to accelerate aircraft retirements in response to slowing demand. It says it will retire 21 jets “earlier than previously planned”.
United operates a massive fleet of more than 1,000 narrowbody and widebody jets.
