A United Airlines Boeing 737 Max 9 lands at San Francisco International Airport on March 13, 2019 in Burlingame, California.
Justin Sullivan | Getty Images
United Airlines reported higher second-quarter revenue and a smaller loss on Tuesday afternoon thanks to an air travel resurgence, the newest airline to release an enlightenment outlook for one of the worst-hit sectors in the Covid pandemic.
The Chicago-based airline expects positive adjusted pre-tax earnings for the third and fourth quarters and plans to increase air traffic in response to higher travel demand. Delta Air Lines and American Airlines also announced last week that they have seen improvements in bookings and financial results.
United shares rose more than 2% in midday trading on Wednesday.
Domestic vacation travel led the recovery, but United said that even international long-haul and business travel recovered faster than expected in the second quarter.
CEO Scott Kirby told CNBC’s “Squawk Box” on Wednesday morning that he had not seen a drop in bookings due to the rapidly spreading Delta Covid-19 variant and that the travel recovery is likely to continue “unchecked.” His comments echoed similar statements made by the CEO of rival Delta last week about the variant.
United and other airlines have repeatedly urged the Biden administration to lift an entry ban on most non-US citizens traveling from the UK and the European Union, which has been in place since the pandemic began.
“We’re not going to stop the Delta variant from coming to the United States by closing these borders because it’s already here,” said Kirby.
The White House said government officials from the US, Mexico, Canada, the EU and the UK continue to meet but have not provided a timetable for a decision.
United’s revenue of $ 5.47 billion for the three months ended June 30 was down more than 50% from the same quarter of 2019, but down nearly 70% from the first quarter of the year as US Officials largely rolled out Covid vaccines this spring and the attractions reopened and more customers returned to air travel.
However, United still posted a net loss of $ 434 million, the sixth consecutive quarterly loss. United had a loss of nearly $ 1.4 billion in the first three months of 2021 and a loss of $ 1.63 billion in the second quarter of 2020. The airline reported revenue of $ 1.1 billion $ US $ 54 billion from a federal wage subsidy, part of the $ 54 billion congress reserved for US airlines since March 2020.
Here’s how United performed in the second quarter compared to Wall Street’s expectations, based on Refinitiv’s average estimates:
- Adjusted earnings per share: a loss of $ 3.91 is as expected.
- Total sales: $ 5.47 billion versus expected revenue of $ 5.37 billion.
The airline said it closed the second quarter with around $ 23 billion in available cash.
Without one-time items, United posted a loss per share of $ 3.91, which is in line with analyst estimates.
United said its capacity for the current quarter will be 26% below 2019 levels. In the second quarter it flew 46% less than in 2019. The cost per seat mile, excluding fuel and other special fees, is likely to increase by 17% compared to the third quarter of 2019, partly due to shorter routes than usual and with smaller planes.
Fuel costs have also increased. United said it paid an average of $ 1.97 a gallon for jet fuel in the second quarter, nearly 67% more than a year ago.
Airlines have reported a surge in bookings since this spring as vaccines went largely up, Covid cases fell, and officials lifted pandemic-era restrictions.
In addition to increased travel demand, freight revenue increased nearly 51% year over year to $ 606 million. While air freight demand makes up a small portion of United’s total revenue, air freight demand was a ray of hope for the airline and others during the pandemic.
But United and other airlines were optimistic about the recovery in demand. United last month announced it would purchase 270 narrowbody jets from Boeing and Airbus, the largest aircraft order ever, to replace older aircraft and grow the airline over the next several years.