Flight Reductions on the Horizon

As travel patterns continue to shift, United Airlines has announced plans to reduce domestic flight capacity by approximately 4% starting this summer. This move comes in response to lower-than-expected demand for domestic travel. Meanwhile, the airline sees robust interest in international routes.

Economic Outlook and Earnings Forecast

In a recent securities filing, United expressed caution regarding its profits, attributing potential declines to looming economic uncertainty. Despite this, the company has upheld its full-year earnings guidance, projecting adjusted earnings per share (EPS) between $11.50 and $13.50. However, if faced with a recession, this figure may drop to an anticipated range of $7 to $9 per share.

Quarterly Performance Highlights

For the first quarter of 2025, United recorded a profit of $387 million, translating to $1.16 per share, a significant recovery from the prior year’s loss of $124 million. Adjusted EPS reached 91 cents, surpassing Wall Street’s expectations of 76 cents. Additionally, total revenue increased by over 5% year-on-year to $13.21 billion, slightly below analysts’ forecasts of $13.26 billion.

While domestic flight unit revenue fell by 3.9%, international unit revenue enjoyed a growth of over 5%, illustrating a stark contrast in performance across markets.

Future Bookings and Market Insights

United Airlines reported stable booking trends in recent weeks, noting a 17% increase in premium-cabin bookings and a 5% rise in international travel, although specific figures for domestic economy class bookings were not disclosed. The airline anticipates second-quarter adjusted earnings per share to fall between $3.25 and $4.25, aligning with market expectations.

Industry Context and Competitive Landscape

As economic pressures mount, other carriers, including Delta Air Lines, are also lowering their growth projections. Delta recently stated that it could not reaffirm its full-year outlook due to market uncertainties.

Scott Kirby, CEO of United Airlines, emphasized the airline’s commitment to a sustainable growth strategy that has historically positioned it favorably, even during downturns. He stated, “It has given us industry-leading margins in the good times and we expect to expand our lead further in challenging economic times.”