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United Airlines will warn of lower profits with careful updates, reducing fewer flights and lower profits after recording first quarter profits for the first time since the coronavirus pandemic.
The Chicago-based airline said it would put fewer seats in the air than was scheduled for later this year, cutting flights during off-peak hours.
The airline also provided two sets of guidance in 2025, saying the macroeconomic environment is “unable to predict this year.”
Airlines’ fortunes are often discretionary costs, and airlines’ wealth is closely tied to the wider economy as tickets are often discretionary and consumers are concerned about inflation or potential unemployment, where consumers refrain from purchasing them.
Economists, including Federal Reserve officials, have warned that US tariffs could hurt consumer sentiment and boost inflation.
In a “stable environment,” United expects to make between $11.50 and $13.50 per share. However, in a “recession environment,” the range ranges from $7 to $9 per share.
“The macro environment is very muddy. United offered two scenarios and left investors to choose their adventure,” said Omair Sharif, president of Prediction at Group Inflation Insights.
United said if the US falls into a recession it is expected to generate 5% less revenue than it would have if it dodged the slowdown.
The carrier’s movement to trim capacity later this year reflected Delta’s decision last week’s decision to do the same. Raymond James analyst Savantty Sythe estimated year-over-year growth to 3% by the fourth quarter, based on United’s reserve schedule.
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Flight restrictions help airlines manage costs and increase fares by tightening the supply of available seats for airlines. Duane Pfennigwerth, an analyst at Evercore ISI, said that slowing United’s plans to grow ahead of its revenue reporting would “show positive surprises” for investors.
United shares rose nearly 7% in after-hours trading.
The company reported net profit of $387 million in the first three months of the year, compared to a loss of $124 million in the same period last year. The first quarter is usually the weakest on airlines. Since 2019, it has not reported first quarter profits.
The airline reported record revenue of $13.2 billion between January and March, up more than 5% from the previous year.
