United Airlines expects to turn a profit in 2022 for the first time since before the pandemic as bookings rise and passengers appear willing to pay more to fly.
United’s shares rose more than 7% in after-hours trading Wednesday after it releasing an upbeat outlook.
The forecast suggests airlines are at a turning point in the pandemic recovery, as a drop in Covid cases has spurred renewed demand for travel and a public that hasn’t yet shied away from higher ticket prices, despite inflation hitting household budgets.
“I’ve never seen in my career, and I’ve been in this industry a long time … such a hockey stick increase of demand,” CEO Scott Kirby told CNBC Wednesday, referring to both business travel and leisure bookings.
Boeing 777ER United Airlines. Aircraft to Fiumicino Leonardo da Vinci Airport.
Massimo Insabato | Mondadori Portfolio | Getty Images
For the second quarter, United is forecasting a 10% operating margin, and the highest quarterly sales in its history, with revenue per passenger mile up 17% over 2019, as higher fares help cover an increase in expenses.
The Chicago-based airline is the second major U.S. carrier to report results and provide an outlook for the peak spring and summer travel season, when airlines generate the bulk of their annual revenue. Delta Air Lines last week reiterated that it foresees a return to profitability this year.
Despite strong demand, United is challenged to add capacity. Its 52 Pratt & Whitney-powered Boeing 777s, some of the biggest planes in its fleet have been grounded since an engine failure in February 2021 and won’t return until mid-May at the earliest, CNBC reported earlier this month. And deliveries of new Boeing 787 Dreamliners have been suspended for much of the past 18 months because of manufacturing flaws.
The airline is also facing a pilot shortage, particularly at regional carriers that feed its hubs, a problem across the sector.
Here’s how United performed in the first quarter compared with what Wall Street…