United Airlines posted better-than-expected first-quarter profit late Tuesday while revenue came in slightly below expectations. The airline chose to follow Delta Air Lines and reduce planned capacity growth amid President Donald Trump's fast-moving trade policy and unclear economic outlook.
United stock jumped in late trade.
United Earnings
United reported late Tuesday that Q1 earnings came in at 91 cents per share, up from a 15 cent per share loss a year ago, with revenue totaling $13.21 billion, increasing 5.4% compared to Q1 2024. Prior to Tuesday's release, analysts predicted United Airlines would see Q1 EPS of 74 cents with sales of $13.23 billion, according to FactSet.
United added that total revenue per available seat mile, or TRASM, grew 0.5% year-over-year. The airline's premium cabin revenue rose 9.2% and business revenue was up 7.4% in Q1. The company also reported that its international travel segment remained strong, with Atlantic revenue per available seat up 4.7% and Pacific revenue per available seat growing 8.5% year-over-year.
United added that forward bookings over the last two weeks "have remained stable," with premium cabins up 17% and international up 5% year-over-year.
However, despite these results, United said it will be reducing domestic capacity growth beginning in Q3 "in response to the current demand environment." United said it is also continuing to make "prudent adjustments to the utilization rate of its fleet, including ongoing reductions in off-peak flying on lower demand days."
The S&P 500 component's financials follow Delta Air Lines, which announced last week that "growth has largely stalled" amid global uncertainty around global trade and plans to reduce capacity growth to align supply with demand.
United Offers Two Forecasts
With ongoing concern around the economy, analysts and investors maybe be more interested in United's guidance than its Q1 results. United guided to Q2 EPS of $3.25-$4.25, with the $3.75 midpoint consensus for $3.91.
For the full year, United gave two forecasts. In a "stable environment," the airline sees adjusted EPS of $11.50-$13.50. But in a "recessionary environment," United pegs adjusted profits at $7-9 a share.
Analyst consensus is at $10.52, not accounting for the Q1 beat.
United's earnings call will be early Wednesday.
United Airlines Stock
United Airlines soared more than 6% after the stock market closed. The S&P 500 stock gained 2% to 67 during Tuesday's regular stock market action.
Meanwhile, S&P 500 peers Southwest Airlines and Delta advanced 1.1% and 1.2%, respectively on Tuesday. American Airlines Group added 2.9% during Tuesday's stock market trade.
Last week, the 18 stocks in the IBD-tracked Transportation-Airline industry group collectively moved more than 6% higher as Trump announced a 90-day pause for his global "reciprocal" tariffs.
Delta kicked off airlines earnings season last week. After United, Alaska Air Group follows on April 23 with Southwest Airlines announcing Q1 results on April 24. American Airlines is also expected to report on April 24.
Delta advanced nearly 10% last week.
Delta: 'Sky Is Stalling'
While Delta bested reduced earnings expectations last week, the airline decided against providing full-year guidance.
"With broad economic uncertainty around global trade, growth has largely stalled. In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures," Delta Chief Executive Ed Bastian said last week.
Bastian added that "given our position of strength, our bias toward action and the decline in fuel prices" Delta is "positioned to deliver solid profitability and free cash flow for the year."
Following this report, Morgan Stanley analyst Ravi Shanker wrote while the stock market had been "pricing in a 'sky is falling' scenario for airline stocks," Delta's earnings show the "trends are 'only' stalling, which should be a sigh of relief for now."
"Airline stocks overall," Shanker added, "should be close to the top of most investors' buy lists, if/when the market goes risk on again."
Shanker added that low jet fuel costs, with U.S. oil trading below $65 per barrel, is a positive for the airline industry. The analyst added that Delta's report shows that international booking seem stable as does corporate demand, both a good sign for the broader sector.
That came amid other data that European and Canadian leisure bookings to the U.S. have tumbled, but corporate travel tends to be more profitable.
Airlines Already Revise Expectations
Prior to Trump further ramping up his tariffs policy and trade war, Delta and several other airlines already revised Q1 guidance lower.
American Airlines last month said the revenue environment has been weaker than initially expected due to softness in the domestic leisure segment, particularly in March. The company has also been affected by the Flight 5342 collision in January over the Potomac River, which resulted in 67 deaths.
American expects flat revenue for the first quarter, down from its previous outlook for 3% to 5% growth. The airline lowered its earnings guidance and now expects a loss between 60 cents and 80 cents per share. In January, American expected a loss of 20 cents to 40 cents.
Elsewhere, S&P 500 component Southwest Airlines cut its forecast for its revenue per available seat mile, and now expects 2% to 4% growth. Southwest previously expected 5% to 7% growth.
The airline lowered the outlook for its cost per available seat mile to about 6% growth, from its prior range for a 7% to 9% increase.
With oil prices lagging, fuel prices could be one positive metric. Southwest estimates its fuel cost per gallon will range from $2.35 to $2.45. It previously expected fuel to cost $2.50 to $2.60 per gallon.
Southwest noted it has made progress on previously announced initiatives, such as assigned seating and extra legroom, which are on track to begin in Q1 2026. The company also launched its first red-eye flights last month.
Other recent initiatives include new interline agreements with Icelandair as well as an amended co-brand agreement with Chase for cardholder benefits. Southwest is pursuing additional airline partnerships, according to the SEC filing.
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