United Airlines to Wall Street: Profit should return next quarter

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United Airlines Holdings Inc. reported another quarterly loss Tuesday, telling investors they will have to wait another quarter for profit.

The loss was narrower than Wall Street expected, however, and the air carrier highlighted a return of higher margins, more profitable business travel and international flights as some of the hallmarks of the quarter.

United
UAL,
+6.58%
said it lost $434 million, or $1.34 a share, in the second quarter, compared with a loss of $1.6 billion, or $5.79 a share, in the second quarter of 2020, when air travel ground to a near standstill due to restrictions meant to curb the spread of COVID-19.

Adjusted for one-time items, the company lost $3.91 a share in the quarter. Revenue rose to $5.47 billion from $1.48 billion in the quarter.

Analysts polled by FactSet had expected the airline to report an adjusted loss of $3.96 a share on sales of $5.35 billion.

The stock fell nearly 2% at one point during after-hours trading, but recovered somewhat and was last down about 0.5%.

United said international long-haul and business travel “accelerated even faster than anticipated.”

“Looking ahead, the company expects continued gains as more businesses return by end of summer and into 2022, with a full recovery in demand anticipated by 2023,” United said in a statement.

“United had a busy quarter on several fronts as the post-COVID travel recovery took off and the company made several important strategic investments,” said Peter McNally, an analyst with Third Bridge Group in New York.

“While revenues are still contracting, the gap with 2019 is narrowing” and United has made the news recently in placing its largest aircraft order and investing in supersonic travel, he said.

Still, U.S. air travel is expected to run into several bottlenecks as demand increases, including those relating to maintenance, aircraft availability and staffing pilots, McNally said.

United said its second-quarter capacity was down 46% as compared with the same period in 2019. The airline expects capacity to be down about 26% in the third quarter, also as compared with 2019, and up 39% quarter-on-quarter.

The airline said it expects to be profitable on an adjusted, pre-tax basis in the third quarter, which would be the first quarter in the black since the fourth quarter
of 2019. The company is likely to be profitable in the fourth quarter as well, it said.

Delta Air Lines Inc.
DAL,
+5.45%
last week surprised Wall Street with its first profit since the pandemic, which the company partly pinned on an uptick for business travel in certain metropolitan areas.

Related: Summer travel is back, but will it be enough to boost flagging U.S. airlines?

Shares of United are up about 7% this year, compared with a 13% for the S&P 500 index
SPX,
+1.52%.



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