United Airlines Records Its Sixth Consecutive Quarterly Loss
United Airlines has recorded its sixth consecutive quarterly loss on due to the COVID-19 pandemic, though revenue quadrupled from a year ago and topped estimates with a strong domestic travel rebound.
US leisure travel has nearly recovered to pre-pandemic levels as more people fly for vacation or to visit friends and family following a massive nationwide vaccination campaign.
Air Travel Recovery
Chicago-based United said it will continue ramping up flying in the third quarter and forecast its total unit revenue - comparing sales to flight capacity - for the period will be higher than the same quarter in 2019, a turning point for the airline.
The company said business and long-haul international travel, to which it is more exposed than rivals, accelerated faster than anticipated, and it expects a full recovery in demand by 2023.
United's adjusted net loss narrowed to $1.26 billion, or $3.91 per share, in the quarter, from $2.6 billion, or $9.31 per share, a year ago.
Analysts had estimated a loss of $3.94, according to IBES data from Refinitiv.
Excluding items, the company lost $434 million in the second quarter. United Airlines has said it expects to be profitable in the third and fourth quarter.
United's second-quarter adjusted operating revenue rose to $5.47 billion from about $1.47 billion a year ago, above analysts' average estimate of $5.35 billion.
US airlines have played down concerns over the impact of a resurgence in COVID-19, spurred by the more contagious Delta variant of the coronavirus, which has become dominant in the United States and many other nations.
United's quarterly revenue was just half of the roughly $10 billion it booked in the same quarter of 2019 before the pandemic jolted the travel industry.
Its shares slipped 0.5% to $46.08 in extended trading after the US airline index had its largest daily percentage gain on Tuesday July 20 since November.
As demand returns, US airlines - which benefited from $54 billion in federal COVID-19 aid for workers' salaries - have rushed to restore their operations.
Last month, United unveiled its largest-ever aircraft order for 270 jets in a push to boost its domestic capacity by almost 30% and better compete for both premium and low-cost travel.
It has also announced a string of investments related to sustainability and innovation as airlines face renewed scrutiny over their environmental impact.
Rival Delta Air Lines recorded a quarterly profit last week.
'Ups And Downs'
The head of United Airlines expects a recovery in travel demand to continue despite a resurgence in COVID-19 spurred by the more contagious Delta variant but warned on Wednesday of vagaries until more people are vaccinated against the virus.
"There's going to be ups and downs between now and the time that enough of the world is vaccinated that this [pandemic] really proceeds into the background, which we look forward to," United Airlines chief executive Scott Kirby said on an investor call.
"We think the most likely outcome is that the continued recovery in demand continues largely unabated...because the evidence is overwhelming that someone who's vaccinated is highly protected against severe disease, hospitalisation, and death," Kirby said.
Only around half of eligible Americans are fully vaccinated against COVID-19, fuelling a fresh vaccination push by US president Joe Biden.
Still, Kirby said that both business and leisure demand have recovered faster than expected, with bookings "getting stronger and stronger every week."
Shares in United rose 3.5% in midday trading, in line with US airline index gains.
It expects business demand to improve by the end of the third quarter to be down approximately 40% to 45% versus the same period in 2019 before the pandemic as more businesses reopen.
A recovery in international travel, to which United is more exposed than rivals, hinges on the easing of border controls.
The United States, for example, continues to bar entry to most non-U.S. citizens who have been in Britain, the 26 Schengen nations in Europe without border controls, Ireland, China, India, South Africa, Iran, and Brazil within the past 14 days.
United said that it does not expect to restore its schedule to Europe before spring, 2022, and to Asia until at least 2023.