United Airlines narrows loss, plans to ramp up flying to meet strong travel demand
United Airlines on Tuesday afternoon reported higher second-quarter revenue and a narrower loss thanks to a resurgence in air travel, the latest carrier to issue a brightening outlook for one of the Covid pandemic’s most battered sectors.
The Chicago-based airline said that it expects to generate positive adjusted pretax income for the third and fourth quarters and that it plans to ramp up flying in response to higher travel demand. Delta Air Lines and American Airlines last week also said they have seen an improvement in bookings and financial results.
United’s shares were up 1.7% in premarket trading on Wednesday.
Domestic leisure travel has led the recovery, but United said even international long-haul and business travel bounced back faster than expected in the second quarter.
CEO Scott Kirby said told CNBC’s “Squawk Box” on Wednesday morning that he hasn’t seen a decline in bookings because of the fast-spreading delta Covid-19 variant and that the rebound in travel would likely continue “unabated.” His comments echoed similar statements on the variant from rival Delta’s CEO last week.
United and other airlines have repeatedly pressed the Biden administration to lift an entry ban on most non-U.S. citizens arriving from the U.K. and the European Union that has been in place since early in the pandemic.
“We’re not going to prevent the delta variant from coming to the United States by closing those borders because it’s already here,” Kirby said.
United’s revenue of $5.47 billion for the three months ended June 30 was down by more than 50% from the same quarter of 2019 but up nearly 70% from the first quarter of the year as U.S. officials rolled out Covid vaccines broadly this spring, attractions reopened and more customers returned to air travel.
However, United still posted a net loss of $434 million, its sixth consecutive quarterly loss. In the first three months of 2021, United had a loss of nearly $1.4 billion and a loss of $1.63 billion in the second quarter of 2020. The airline said it recorded $1.1 billion in income from a federal payroll grant, part of the $54 billion Congress set aside for U.S. airlines since March 2020.
Here’s how United performed in the second quarter compared with what Wall Street expected, based on average estimates compiled by Refinitiv:
Adjusted results per share: a loss of $3.91, in line with expectations.
Total revenue: $5.47 billion versus expected $5.37 billion in revenue.
The airline said it ended the second quarter with about $23 billion in available liquidity. Adjusting for one-time items, United posted a per-share loss of $3.91, in line with analysts’ estimates.
United said its capacity for the current quarter will be down 26% from 2019 levels. In the second quarter, it flew 46% less than in 2019. It said its cost per seat mile, excluding fuel and other special charges, will likely be up 17% over the third quarter of 2019, partly due to flying shorter routes than usual and using smaller planes.
Fuel costs have also climbed. United said it paid an average of $1.97 a gallon for jet fuel in the second quarter, up nearly 67% from a year ago.
Airlines have reported a surge in bookings since this spring as vaccines rolled out broadly, Covid cases fell and officials dropped pandemic-era restrictions.
In addition to higher travel demand, cargo revenue rose nearly 51% from last year to $606 million. While a small part of United’s overall sales, air cargo demand has been a bright spot during the pandemic for the carrier and others.
United executives are scheduled to discuss the results and provide a more in-depth outlook on a 10:30 a.m. ET call Wednesday.
Analysts are expected to quiz airline management about trends in international and business travel bookings, two pillars of United’s business before the pandemic. The fast-spreading delta variant has raised concerns about renewed limits on travel.
On Monday, the State Department and Centers for Disease Control and Prevention advised against travel to the U.K. because of rising case counts.
But United and other airlines have been upbeat about the demand recovery. United last month said it plans to buy 270 Boeing and Airbus narrow-body jets, its largest aircraft order ever, to replace older planes and grow the carrier over the next several years.
This article originally appeared on CNBC