CHICAGO, IL – United Airlines released their forecast for the current quarter on Wednesday, revealing a profit projection lower than expected. This news comes as U.S. carriers continue to face challenges in increasing earnings despite a surge in travel demand. Last week, Delta Air Lines also reported a profit outlook below Wall Street estimates, while American Airlines and Southwest Airlines have revised their revenue forecasts for the June quarter.
With a significant increase in summer travel, U.S. carriers have seen over 3 million people passing through airport security checkpoints in a single day on July 7. However, the industry has responded by adding more seats in the domestic market than there is demand, leading to a decrease in airfares at the lower end of the pricing spectrum. This trend is a concern for airlines dealing with rising labor and operational costs, relying on higher airfares to maintain profitability.
In an effort to stabilize ticket prices, analysts predict that industry capacity growth will slow down from high-single to low-single digits in the latter part of the year. United Airlines anticipates an adjusted profit between $2.75 and $3.25 per share for the quarter ending on September 30, falling short of the $3.44 per share that analysts had previously projected.
CEO Scott Kirby of United Airlines has announced plans to reduce domestic capacity by 3 percentage points in the fourth quarter to strengthen pricing power. This aligns with a broader industry trend as multiple airlines have begun cutting unprofitable routes. Delta Airlines also expects a notable improvement in pricing power starting from August onwards.
Despite the challenges faced by U.S. carriers, United Airlines has reaffirmed its 2024 profit estimate of $9 to $11 per share. The company’s adjusted earnings for the June quarter surpassed expectations at $4.14 per share. Industry experts are closely watching how the move towards capacity rationalization will impact ticket prices and profitability in the coming months. United Airlines is set to discuss its quarterly results with analysts and investors on Thursday morning.
