United Airlines Maintains Outlook Despite Economic Concerns
United Airlines kept its full-year forecast intact on Tuesday but offered a secondary projection should the U.S. slip into a recession. The airline said the economic outlook is “impossible to predict” but expressed confidence in turning a profit regardless of the macroeconomic environment.
Revenue and Profits Show Mixed Results
United Airlines reported a profit of $387 million, or $1.16 per share, for the first quarter, reversing a loss of $124 million, or 38 cents per share, from the previous year. Adjusted earnings per share of 91 cents beat Wall Street expectations, which had forecasted 76 cents. However, the airline’s total revenue of $13.21 billion was slightly below the $13.26 billion analysts anticipated.
Impact of U.S. Recession on Airline Business
The airline warned that if a recession occurs, its earnings could drop to between $7 and $9 per share on an adjusted basis. United Airlines has already begun adjusting its flight schedule, cutting domestic flights by about 4% in response to weak domestic demand, while international flights remain robust.
Future Outlook and Market Response
Despite the challenges, United Airlines is still forecasting strong second-quarter performance, with adjusted earnings per share expected to range from $3.25 to $4.25. The airline has seen a 17% increase in premium-cabin bookings and a 5% rise in international travel bookings, suggesting that higher-end demand is stabilizing its outlook.
Challenges and Adjustments for Domestic and International Flights
While United Airlines is optimistic about international travel, its domestic business faces headwinds. CEO Scott Kirby acknowledged that domestic bookings are the weakest, and flights to Canada have also been scaled back. These trends reflect broader industry adjustments, as airlines like Delta and Frontier are also revising their growth plans due to weaker-than-expected domestic bookings.