United Airlines said Wednesday that it earned $329 million in the second quarter as summer vacationers packed planes, but the results fell far short of Wall Street expectations due largely to soaring fuel prices.
United said strong revenue trends have carried over into the third quarter, with figures indicating higher average fares.
The airline also said it is trimming its schedule in the final six months of the year to avoid the delays and cancellations that have plagued the industry this spring and summer.
Shares of United Airlines Holdings Inc. fell about 7% in extended trading nearly an hour after the results were released.
The quarter marked United's first profit without federal pandemic aid in the COVID-19 age.
“It’s nice to return to profitability, but we must confront three risks that could grow over the next 6-18 months," CEO Scott Kirby said in a statement. He warned about factors causing delays and cancellations, high fuel prices, “and the increasing possibility of a global recession.”
United executives declined further comment until a call with analysts on Thursday.
The second-quarter income reversed a $434 million loss a year earlier but fell far short of the $1.05 billion profit in the second quarter of 2019.
Excluding non-repeating items, Chicago-based United said it earned $1.43 per share. Analysts expected $1.85 per share, according to a survey by FactSet.
Revenue was $12.11 billion, United's best ever in a second quarter and in line with analysts' forecasts. It was 6% higher than in 2019, even though United did nearly 15% less flying.
Revenue for each seat flown one mile, a closely watched figure among airlines, rose 24% compared with the same quarter in 2019 — the result of higher average fares.
United predicted that the per-seat figure will rise by 24% to 26% over 2019 in the third quarter. Total revenue will beat 2019 by 11%, the airline said.
Clearly many people are eager to travel after two years of pandemic lockdown, and they don't care if the planes are crowded. The average United flight was 87% full in the April-June quarter, and for trips within the United States, it was just under 90%.
United is curbing flights in an effort to avoid delays and cancellations. The airline is continuing to cut passenger-carrying capacity — by 11% in the third quarter and 10% in the fourth. Limiting seats helps drive up fares.
United's costs are also rising. Expenses other than fuel rose 17% on a per-seat basis, at the upper end of United's last forecast before the quarter ended June 30.
The airline paid an average of $4.18 per gallon for fuel, higher than the $4.02 it had predicted. Since the quarter ended, however, spot prices have dropped about 35 cents a gallon or 10%, according to Energy Department figures.
