United Airlines Sets Strong Pace in 2024 With Q2 Earnings Success

Published on July 18, 2024

United Airlines (UAL) announced its financial outcomes for the second quarter of 2024 today. The airline recorded pre-tax earnings of $1.7 billion, achieving a pre-tax margin of 11.6%, and adjusted pre-tax earnings of $1.8 billion with a corresponding margin of 12.1%. These results align with the company’s expectations for industry-leading pre-tax margins. Furthermore, United Airlines reported diluted earnings per share of $3.96 and adjusted diluted earnings of $4.14, consistent with the forecasts issued at the quarter’s commencement. The company maintains its projection for an adjusted diluted earnings per share of $9 to $11 for the entire year of 2024.

For almost two years, the airline has been preparing for the significant domestic capacity reductions that were recently confirmed by several U.S. airlines for this summer. By mid-August, an inflection point is expected with a roughly 3 percentage point decline in the industry’s capacity growth rate. United Airlines identifies three key revenue diversity strengths that have helped it excel during these challenging times and expects these to drive further growth. Firstly, premium revenue increased by 8.5% in the second quarter compared to the previous year. Secondly, revenue from Basic Economy tickets surged by 38% year-over-year. Lastly, the airline saw an increase in its market share among domestic frequent travelers during the quarter.

“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 Airlines has adeptly navigated ongoing industry-wide challenges by implementing strategic business management practices. The airline has reduced its costs, resulting in a 4.8% decrease in Cost per Available Seat Mile (CASM) and a better-than-expected increase of 2.1% in CASM excluding certain expenses. Additionally, United generated $2.9 billion in net cash from operating activities and achieved $1.9 billion in free cash flow during the quarter. In a move to strengthen its financial foundation, the airline made an early repayment in early July of the high-cost MileagePlus term loan’s remaining $1.8 billion balance, significantly reducing its future interest obligations. At the end of the quarter, the airline reported an adjusted net debt to EBITDAR ratio of 2.6x over the trailing twelve months. Looking forward, United has also adjusted its domestic capacity plans for the fourth quarter, reducing it by approximately 3 percentage points from its initial projections, demonstrating a proactive approach to align with current market 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.

United Airlines Reports Strong Performance in Second Quarter of 2024

United Airlines showcased a robust performance in the second quarter of 2024, demonstrating significant gains in various operational metrics. Here are the key financial results and strategic achievements from the quarter:

Financial Highlights:

• Capacity Increase: The airline saw an 8.3% rise in capacity compared to the same quarter last year.
• Revenue Growth: Total operating revenue reached $15.0 billion, marking a 5.7% increase from the second quarter of 2023.
• Earnings: Pre-tax earnings were reported at $1.7 billion, with a pre-tax margin of 11.6%. Adjusted pre-tax earnings stood at $1.8 billion, resulting in an adjusted pre-tax margin of 12.1%.
• Net Income: United posted a net income of $1.3 billion and an adjusted net income of $1.4 billion.
• Earnings per Share: Diluted earnings per share were $3.96, with adjusted diluted earnings per share reaching $4.14.
• Operational Costs and Efficiency: CASM decreased by 4.8%, while CASM-ex experienced a 2.1% uptick.
• Fuel and Liquidity: The average fuel price per gallon was $2.76, and the airline concluded the quarter with $18.2 billion in available liquidity.
• Debt Management: Total debt and finance lease obligations amounted to $26.6 billion at the end of the quarter. In a strategic move, United pre-paid the remaining $1.8 billion of the high-cost MileagePlus term loan.

Operational and Customer Experience Innovations:

• Kinective Media Launch: United introduced Kinective MediaSM, a pioneering media network that leverages travel behavior insights to offer personalized advertising and experiences.
• Service Enhancements: The airline resumed two daily flights from Newark to Tel Aviv and was recognized by TIME100 as one of the Most Influential Companies for its sustainability initiatives.
• Expanded Network: Nearly 200 additional flights were added to facilitate travel to the major political conventions in Milwaukee and Chicago.
• Customer Engagement: United achieved its highest second-quarter consumer satisfaction rating and expanded its TSA PreCheck Touchless ID technology across several key markets.

Awards and Recognition:

• Industry Accolades: United Airlines was featured in Fast Company’s 2024 World Changing Ideas List and earned a spot on Fair360’s Top 50 Companies list for workplace fairness for the sixth consecutive year.
• Community and Employee Engagement: Over 2,000 employees volunteered more than 12,000 hours during the quarter, and MileagePlus members donated over 10 million miles to support various causes.

Looking Ahead:

United Airlines remains committed to enhancing its service offerings, expanding its network, and maintaining its focus on operational efficiency and sustainability. The airline’s proactive adjustments in domestic capacity and strategic debt management are poised to position it strongly against ongoing market trends and challenges.