Source: United Airlines

  • A 2Q pre-tax margin expected to be among industry leaders, despite excess industry capacity in the domestic market
  • Expect best unit revenue performance among large peers
  • Sees mid-August as inflection point when industry-wide oversupply eases and United is best positioned to benefit

United Airlines (UAL) reported second-quarter 2024 financial results. The company had pre-tax earnings of $1.7 billion, with a pre-tax margin of 11.6%; adjusted pre-tax earnings1 of $1.8 billion, with an adjusted pre-tax margin1 of 12.1%. The company expects pre-tax margin to be near the top of the industry. The company also achieved diluted earnings per share of $3.96; adjusted diluted earnings per share1 of $4.14, in line with second-quarter 2024 guidance provided at the start of the quarter. The company continues to expect full-year 2024 adjusted diluted earnings per share2 of $9 to $11.

For nearly two years, the airline has been anticipating significant domestic capacity reductions recently announced by a variety of U.S. airlines this summer and mid-August is an inflection point, with published schedule changes showing an approximately 3 point decline in industry capacity growth rate. The airline expects three critical revenue diversity advantages that propelled it to the top of the industry during this challenging period to further accelerate. The first, premium revenue, grew 8.5% in the second quarter versus the same quarter last year. The second, Basic Economy revenue, grew 38% year-over-year during the quarter. The third, market share among domestic road warriors, increased during the quarter year-over-year. Â

“The revenue diversity advantages that we’ve built with our premium customers, Basic Economy customers, and domestic road warriors, on top of the world’s best loyalty program and leading customer service, have propelled our margins to near the top of the industry,” said United Airlines CEO Scott Kirby. “Looking forward, we see multiple airlines have begun to cancel loss-making capacity, and we expect leading unit revenue performance among our largest peers in the second half of the third quarter. United has long been preparing for the moment when industry wide domestic capacity would adjust – it’s now clear that inflection point is just 30 days away.”

United has also continued to strategically manage the business in the face of industry wide challenges. United reduced costs and delivered CASM of down 4.8% and better-than-expected CASM-ex1 of up 2.1%. The airline also generated net cash provided by operating activities of $2.9 billion and $1.9 billion of free cash flow1 in the quarter. In early July, the company voluntarily prepaid the remaining balance of the high-cost MileagePlus term loan, totaling $1.8 billion, which further strengthens its balance sheet and reduces the airline’s interest burden in the years ahead. The airline ended the quarter with trailing twelve months adjusted net debt to EBITDAR of 2.6x3. Looking ahead, United has also reduced planned domestic capacity by approximately 3 points in the fourth quarter, compared to the company’s previous plan – reflecting the airline’s firm commitment to taking its own action to adjust to current trends.

“At United, we have been effectively managing costs, cash and capacity against a challenging industry backdrop because we’re focused on doing what’s necessary to hit our financial targets. Thank you to leaders across the company for embracing a ‘no excuses’ approach to running our business. It gives me confidence in our ability to achieve our $9-$11 EPS2 goal for 2024, despite the challenges the industry has faced this year,” said Kirby.

Second-Quarter Financial Results

  • Capacity up 8.3% compared to second-quarter 2023.
  • Total operating revenue of $15.0 billion, up 5.7% compared to second-quarter 2023.
  • TRASM down 2.4% compared to second-quarter 2023.
  • CASM down 4.8%, and CASM-ex1 up 2.1%, compared to second-quarter 2023.
  • Pre-tax earnings of $1.7 billion, with a pre-tax margin of 11.6%; adjusted pre-tax earnings1 of $1.8 billion, with an adjusted pre-tax margin1 of 12.1%.
  • Net income of $1.3 billion; adjusted net income1 of $1.4 billion.
  • Diluted earnings per share of $3.96; adjusted diluted earnings per share1 of $4.14.
  • Average fuel price per gallon of $2.76.
  • Ending available liquidity4 of $18.2 billion.
  • Total debt and finance lease obligations of $26.6 billion at quarter end.
  • Trailing twelve months adjusted net debt to adjusted EBITDAR of 2.6x3.
  • In July, voluntarily pre-paid the remaining $1.8 billion outstanding balance of the MileagePlus term loan with an interest rate near 11%.

Key Highlights

  • Launched Kinective MediaSM by United Airlines – the first media network that uses insights from travel behaviors to connect customers to personalized advertising, experiences and offers from leading brands.
  • Resumed the airline’s two daily flights from Newark to Tel Aviv.
  • Recognized as one of TIME100’s Most Influential Companies for United’s commitment to sustainability through its United Airlines Ventures Sustainable Flight FundSM.
  • Announced the addition of nearly 200 flights to Milwaukee and Chicago this summer for easier travel to the Republican and Democratic National Conventions.
  • Debuted a new onboard safety video, providing clear, easy-to-follow demonstrations of critical safety procedures.

Customer Experience

  • Achieved the highest rating for a second quarter5 on the consumer satisfaction rating scale, the Net Promoter Score.
  • Expanded TSA PreCheck Touchless ID technology across key markets, including Newark, Los Angelesand Atlanta, following its debut in Chicago.
  • The United app continues to be the most downloaded airline app with over 89% of customers engaging digitally on day of travel.
  • Launched a new seat preference feature that automatically re-seats customers when their preferred seat becomes available. Over 30% of customers who have saved their seat preferences are moved to their preferred seat.
  • For the quarter, 47% of passengers were rebooked through United’s automated service or through self-service, an increase in 7 points year over year.
  • Debuted limited-edition Wrexham AFC-themed amenity kits and pajamas in premium cabins on select long-haul international flights for customers to share in celebration of the soccer team’s success.

Operations

  • Flew the most customers for a second quarter in company history, carrying 44.4 million passengers, and set the record for the most ever customers carried in a day by the airline at 565,000.
  • Completed 34 days rated first amongst U.S. airlines for on-time departures, closing the quarter with the second best on-time departures amongst U.S. carriers.
  • United Express achieved the lowest cancel rate for a second quarter5 in company history.
  • Opened a state-of-the-art cargo facility at the New York/Newark airport, expanding the airline’s cargo space at the hub to 319,000 square feet.

Network

  • Operated the largest schedule in the airline’s history, with the highest number of daily departures at nearly 2,700. Operated the largest domestic U.S. and Canada second quarter schedule in the airline’s history and an international schedule 35% larger than the next largest U.S. carrier by available seat miles.
  • Inaugurated service to Georgetown, Guyana and launched new routes to existing destinations, with new flights between Tulum, Mexico and Chicago and Los Angeles; Barcelona, Spain and San Francisco; Athens, Greece and Chicago; and Tokyo-Haneda and Guam.
  • Added second daily seasonal flights between Porto, Portugal and New York/Newark; Brussels and New York/Newark; and between Rome and Washington D.C., and resumed a seasonal daily flight between Reykjavik, Iceland and New York/Newark for the first time since 2022.
  • Launched or reinstated 12 additional domestic routes, including Chicago to Nantucket, Mass. and Wilmington, N.C.; Denver to Fairbanks, Alaska and Myrtle Beach, S.C.; Houston to Traverse City, Mich.and Ontario, Canada; and Washington, D.C. to Anchorage, Alaska, Mobile, Ala., State College, Pa., Wilkes Barre/Scranton, Pa., Harrisburg, Pa. and Philadelphia.
  • United operated the largest ever schedule to Canada since the start of the Air Canada/United joint business agreement, including the launch or reinstatement of Chicago to Winnipeg and Quebec City; Denver to Winnipeg; Newark to Halifax; Los Angeles to Calgary; and Washington, D.C. to Vancouver.

Awards

  • United was recognized in Fast Company’s 2024 World Changing Ideas List for its United Airlines Ventures Sustainable Flight Fund.
  • Recognized as the only airline in Fair360’s Top 50 Companies list for an ongoing commitment to workplace fairness, a list the company has made for the sixth year in a row.
  • Awarded the Helen Darling Award for Excellence in Health Care Value and Innovation by Business Group on Health for providing best-in-class healthcare benefits and resources to support employees and their families.
  • Recognized as a VETS Indexes 3 Star Employer for the company’s commitment to recruiting, hiring and supporting veterans and the military-connected community.
  • Recognized with the Silver Anvil award for Best In-House Team by the Public Relations Society of America for the company’s Good Leads the Way campaign.
  • Executive Vice President of Government Affairs and Global Public Policy Terri Fariello was named one of “Washington, D.C.’s 500 Most Influential People of 2024” by the Washingtonian.

Employees, Communities

  • Over 2,000 United employees volunteered more than 12,000 hours in communities across hub markets, including 5,300 hours of service to local communities during volunteer month.
  • MileagePlus members donated more than 10 million miles to participating non-profit organizations via United’s Miles on a MissionSM program, and over 350 in-kind flights to disaster relief partners.
  • United transported nearly 320 million pounds of cargo, including approximately 33 million pounds of medical shipments and 29 thousand pounds of military shipments, with more than 110 tons of cargo flown to support the Gaza humanitarian crisis, Brazil flood relief, Maui Recovery, and other disaster preparedness, relief and recovery efforts.
  • United’s Aviate Academy launched a pilot development program with Texas Southern University and United awarded the university’s aviation program with more than $200,000 in scholarships.
  • Donated $100,000 to Houston disaster relief organizations supporting those impacted by severe storms and flooding in the greater Houston area.
  • Committed $50,000 to Airlink and Global Giving’s Brazil Flood Relief Fund, and, alongside customers, United raised nearly seven million miles in support of Airlink, American Red Cross, and World Central Kitchen to support on the ground disaster relief.
  • BEACON, United’s Black Business Resource Group, hosted seven events across hub cities in honor of Juneteenth to celebrate the holiday.
  • United’s LGBTQ+ Business Resource Group EQUAL participated in ten Pride parades across the country throughout the month of June to celebrate Pride Month.

Earnings Call

UAL will hold a conference call to discuss second quarter financial results, as well as its financial and operational outlook for the third-quarter 2024 and beyond, on Thursday, July 18, at 9:30 a.m. CDT/10:30 a.m. EDT. A live, listen-only webcast of the conference call will be available at ir.united.com. The webcast will be available for replay within 24 hours of the conference call and then archived on the website.

Outlook

This press release should be read in conjunction with the company’s Investor Update issued in connection with this quarterly earnings announcement, which provides additional information on the company’s business outlook (including certain financial and operational guidance) and is furnished with this press release to the U.S. Securities and Exchange Commission on a Current Report on Form 8-K. The Investor Update is also available at ir.united.com. Management will also discuss certain business outlook items, including providing certain full year 2024 financial targets, during the quarterly earnings conference call.

The company’s business outlook is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release. Please see the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

About United

At United, Good Leads The Way. With hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C., United operates the most comprehensive global route network among North American carriers, and is now the largest airline in the world. For more about how to join the United team, please visit www.united.com/careers and more information about the company is at www.united.com. United Airlines Holdings, Inc., the parent company of United Airlines, Inc., is traded on the Nasdaq under the symbol “UAL”.

Website Information

We routinely post important news and information regarding United on our corporate website, www.united.com, and our investor relations website, ir.united.com. We use our investor relations website as a primary channel for disclosing key information to our investors, including the timing of future investor conferences and earnings calls, press releases and other information about financial performance, reports filed or furnished with the U.S. Securities and Exchange Commission, information on corporate governance and details related to our annual meeting of shareholders. We may use our investor relations website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We may also use social media channels to communicate with our investors and the public about our company and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels are not incorporated by reference into, and are not a part of, this document.