United Airlines (UAL) today reported second-quarter 2024 financial results. The company had pre-tax earnings of $1.7 billion, with a pre-tax margin of 11.6%; adjusted pre-tax earnings1 of $1.8 billion, with an adjusted pre-tax margin1 of 12.1%.
The company expects pre-tax margin to be near the top of the industry. The company also achieved diluted earnings per share of $3.96; adjusted diluted earnings per share1 of $4.14, in line with second-quarter 2024 guidance provided at the start of the quarter.
The company continues to expect full-year 2024 adjusted diluted earnings per share2 of $9 to $11.
For nearly two years, the airline has been anticipating significant domestic capacity reductions recently announced by a variety of U.S. airlines this summer and mid-August is an inflection point, with published schedule changes showing an approximately 3 point decline in industry capacity growth rate.
The airline expects three critical revenue diversity advantages that propelled it to the top of the industry during this challenging period to further accelerate.
The first, premium revenue, grew 8.5% in the second quarter versus the same quarter last year. The second, Basic Economy revenue, grew 38% year-over-year during the quarter.
The third, market share among domestic road warriors, increased during the quarter year-over-year.
Scott Kirby, United Airlines CEO said: “The revenue diversity advantages that we’ve built with our premium customers, Basic Economy customers, and domestic road warriors, on top of the world’s best loyalty program and leading customer service, have propelled our margins to near the top of the industry.
“Looking forward, we see multiple airlines have begun to cancel loss-making capacity, and we expect leading unit revenue performance among our largest peers in the second half of the third quarter.
“United has long been preparing for the moment when industry wide domestic capacity would adjust – it’s now clear that inflection point is just 30 days away.”
United has also continued to strategically manage the business in the face of industry wide challenges. United reduced costs and delivered CASM of down 4.8% and better-than-expected CASM-ex1 of up 2.1%.
The airline also generated net cash provided by operating activities of $2.9 billion and $1.9 billion of free cash flow1 in the quarter.
In early July, the company voluntarily prepaid the remaining balance of the high-cost MileagePlus term loan, totaling $1.8 billion, which further strengthens its balance sheet and reduces the airline’s interest burden in the years ahead.
The airline ended the quarter with trailing twelve months adjusted net debt to EBITDAR of 2.6×3. Looking ahead, United has also reduced planned domestic capacity by approximately 3 points in the fourth quarter, compared to the company’s previous plan – reflecting the airline’s firm commitment to taking its own action to adjust to current trends.
Kirby said: “At United, we have been effectively managing costs, cash and capacity against a challenging industry backdrop because we’re focused on doing what’s necessary to hit our financial targets.
“Thank you to leaders across the company for embracing a ‘no excuses’ approach to running our business.
“It gives me confidence in our ability to achieve our $9-$11 EPS2 goal for 2024, despite the challenges the industry has faced this year”.
Second-Quarter Financial Results:
Capacity up 8.3% compared to second-quarter 2023.
Total operating revenue of $15.0 billion, up 5.7% compared to second-quarter 2023.
TRASM down 2.4% compared to second-quarter 2023.
CASM down 4.8%, and CASM-ex1 up 2.1%, compared to second-quarter 2023.
Pre-tax earnings of $1.7 billion, with a pre-tax margin of 11.6%; adjusted pre-tax earnings1 of $1.8 billion, with an adjusted pre-tax margin1 of 12.1%.
Net income of $1.3 billion; adjusted net income1 of $1.4 billion.
Diluted earnings per share of $3.96; adjusted diluted earnings per share1 of $4.14.
Average fuel price per gallon of $2.76.
Ending available liquidity4 of $18.2 billion.
Total debt and finance lease obligations of $26.6 billion at quarter end.
Trailing twelve months adjusted net debt to adjusted EBITDAR of 2.6×3.
In July, voluntarily pre-paid the remaining $1.8 billion outstanding balance of the MileagePlus term loan with an interest rate near 11%.
