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United Airlines plans to fly less and warned of lower profits in a cautious update after it posted a first-quarter profit for the first time since the coronavirus pandemic.
The Chicago-based airline said it would put fewer seats in the air than planned in the second half of the year and reduce flights at off-peak times.
The airline also offered two sets of guidance for 2025, saying the macroeconomic environment was “impossible to predict this year”.
Airlines’ fortunes are closely tied to the wider economy because tickets are often a discretionary expense and consumers will refrain from buying them if they are worried about inflation or the possibility of unemployment.
Economists, including Federal Reserve officials, have warned that US tariffs have hurt consumer sentiment and could push up inflation.
In a “stable environment”, United expects to earn between $11.50 and $13.50 a share, the same guidance it issued in January. But in a “recessionary environment”, the range falls between $7 and $9 a share.
“The macro environment is so muddied that . . . United offered up two scenarios, leaving it up to investors to choose their own adventure,” said Omair Sharif, president of forecasting group Inflation Insights.
United said if the US entered a recession it expected to bring in 5 per cent less revenue than if it dodged a slowdown.
The carrier’s move to trim capacity in the second half of the year echoes Delta Air Lines’ decision last week to do the same. Raymond James analyst Savanthi Syth estimated that, based on United’s preliminary schedules, it would reduce its year-on-year growth from 8 per cent in the first half to 3 per cent by the fourth quarter.
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Limiting flying helps airlines control costs and keeps fares higher by tightening the supply of available seats. Ahead of the earnings report, Evercore ISI analyst Duane Pfennigwerth said that if United were to slow its plans to grow it would “represent a positive surprise” for investors.
United shares rose nearly 7 per cent in after-hours trading.
The company reported net income of $387mn in the first three months of the year, compared with a loss of $124mn in the same period last year. The first quarter is typically the weakest for airlines. It had not reported a first-quarter profit since 2019.
The airline reported record revenue of $13.2bn between January and March, up more than 5 per cent from a year earlier.
