United Earnings Call – Putting Puzzle Pieces Together |

United Air Lines reported its first-quarter earnings earlier this week. The good news is that United was one of the few airlines that beat the first quarter consensus estimates, with an adjusted EPS of $0.92, which handily beat the street estimates that ranged from $0.72 to $0.75. United posted a profit of $387 million in Q1 2025, compared with a loss of $124 million in 2024. The carrier expects to earn between $3.25 and $4.25 per share in the second quarter. First quarter revenue was $13.21bn, in line with estimates of $13.23bn. United showed strength in the premium market, which, like Delta, differentiates the two majors from the rest of the industry. Revenue grew 5%, as did capacity, with a stable load factor for the quarter. Premium revenue rose 9% YoY, and corporate revenue was 7% higher. United also sees forward bookings over the last two weeks as stable, which is a positive sign. International revenue remained resilient, with transatlantic revenue up 5% and transpacific revenue up 9%. The carrier was also able to repurchase $451mm of shares during the quarter, leaving about $1 billion of its current share repurchase authorization. [caption id="attachment_90910" align="aligncenter" width="640"] image: United Airlines[/caption] Future guidance for the full year was provided in two scenarios. United's first scenario re-affirmed its full year guidance of EPS between $11.50 to $13.50 per share. But the company also offered a recession scenario in which full year EPS could drop to between $7 and $9 per share. The latter numbers reflect typical performance in prior recessions, where typically revenue movements of 10%-13% have occurred. The difference is that United is projecting profitable operations even through a recession, driven by premium revenues and successful cost cutting efforts. Profitable airlines during a recession are very rare occurrences and some in the industry believe that combination to be implausible. The company had already announced capacity decreases that will amount to about 4% of capacity through year end and grounding of 21 aircraft, a shift in plans. The 21 aircraft represent about 2% of capacity, and we would expect additional capacity restrictions should a recessionary scenario take hold. If the latter does happen, it will be interesting to watch to see whether Delta and United, each with an emphasis on Premium cabins less sensitive to economic turmoil will be enough to balance out lower revenues and yields in economy to remain profitable through the remainder of the year. Of course, with the partial postponement of tariffs by the Trump administration, and confusion over whether tariffs will be "on" or "off" later in the year, we don't yet know which scenario will play out. Unlike Delta and Frontier, who pulled their forward looking full year guidance, United has boldly predicted a profitable recession-based scenario. Time will tell which scenario will occur and whether their projections are plausible.

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