United Airlines Earnings Forecast: Carrier Maintains Outlook Despite Recession Concerns

Published on April 19, 2025

United Airlines has taken the unusual step of providing a dual earnings forecast for 2025, maintaining its original full-year outlook while simultaneously offering an alternative scenario should the U.S. economy slip into recession. Despite economic uncertainties, the carrier expects to remain profitable under either scenario, according to its Q1 2025 earnings report released on Tuesday. This cautious yet confident approach highlights the airline’s strategic positioning in a volatile market environment.

United’s Dual Earnings Forecast Strategy

In an unprecedented move reflecting the current economic uncertainty, United Airlines has presented a dual earnings forecast approach. The carrier maintained its original full-year guidance issued in January, projecting adjusted earnings per share of $11.50 to $13.50. However, acknowledging potential economic headwinds, United also provided a recession scenario forecast with expected adjusted earnings between $7 and $9 per share.

This dual approach to the United Airlines earnings forecast reflects the carrier’s candid assessment of market conditions. In its securities filing, the company stated: “The Company’s outlook is dependent on the macro environment which the Company believes is impossible to predict this year with any degree of confidence.” This transparent acknowledgment of uncertainty sets United apart from competitors who have either reduced guidance or declined to provide full-year outlooks.

Q1 2025 Earnings Results

The United Airlines earnings forecast comes alongside a solid performance in the first quarter of 2025. The carrier swung to a profit of $387 million, or $1.16 per share, compared to a loss of $124 million, or $0.38 per share, in the same period last year. On an adjusted basis, earnings of $0.91 per share exceeded Wall Street expectations of $0.76 per share.

The carrier’s revenue increased by more than 5% year-over-year to $13.21 billion, slightly below analyst expectations of $13.26 billion. This performance, which supports the company’s maintained earnings forecast, came as United expanded capacity by almost 5% compared to the first quarter of 2024.

Domestic Weakness vs. International Strength

A key factor influencing the United Airlines earnings forecast is the divergent performance between domestic and international markets. The airline reported that unit revenue for domestic flights fell 3.9% from last year during the first quarter, reflecting weaker demand in the U.S. market. In contrast, unit sales from international routes rose more than 5%, highlighting the strength of the carrier’s global network.

United Airlines is seeing strong demand for premium cabin bookings, with a 17% increase year-over-year, helping support the carrier’s earnings forecast despite domestic pressures. (Image: Representative)

This geographic disparity has become a defining feature of the current airline market landscape. CEO Scott Kirby identified domestic travel as “the weakest region that we have” during his CNBC interview. He further noted that Canada represents the second-weakest segment, with United and other carriers scaling back flights due to falling demand this year.

United’s Chief Commercial Officer, Andrew Nocella, provided additional context during Wednesday’s earnings call, noting that Europe-originating bookings to the United States are down 6% from last year, while those from Canada have declined by 9%. These figures help explain the airline’s cautious approach to its earnings forecast for the full year.

Planned Capacity Adjustments

In response to current market conditions and to protect its earnings forecast, United Airlines announced plans to cut domestic flights starting this summer. The carrier will trim domestic capacity by approximately 4% beginning in the third quarter, with a focus on off-peak domestic flights where demand has experienced the most significant drop.

This strategic adjustment aligns with similar moves by competitors. Both Delta Air Lines and Frontier Airlines have announced reductions to their growth plans this year, citing weaker-than-expected domestic bookings. By proactively managing capacity, United aims to maintain yield and support its financial outlook, regardless of which economic scenario unfolds.

Premium Travel Driving Growth

A bright spot supporting United’s earnings forecast is the continued strength in premium travel segments. The airline reported that premium-cabin bookings are up 17% compared to the same point last year, indicating that higher-yield business and luxury leisure travel remains resilient despite broader economic concerns.

This trend aligns with United’s strategic focus on capturing more high-value travelers. Both United and Delta are capitalizing on demand from travelers willing to pay more for premium seats and enhanced services, even as economic factors like President Donald Trump’s trade war, mass government layoffs, and other elements weigh on consumer sentiment.

The strength in premium bookings provides United with a crucial buffer against domestic weakness, helping to justify the carrier’s decision to maintain its original earnings forecast while acknowledging potential downside risks. This segment diversification strategy is proving valuable in the current volatile market environment.

Tariff Impact and Aircraft Orders

An important consideration for United’s long-term earnings forecast is the potential impact of tariffs on aircraft deliveries. During Wednesday’s earnings call, United’s president, Brett Hart, addressed this concern, stating that the airline doesn’t expect “a meaningful direct impact from tariffs” tied to its airplane purchases.

Hart explained that “Boeing accounts for the majority of our future total order book and most of our Airbus A321neos are produced in Alabama.” This positioning potentially shields United from some of the tariff effects that might impact competitors with different fleet strategies.

However, the situation is more complex than it might initially appear. While Boeing produces aircraft in the U.S. and Airbus manufactures some of its narrow-body planes in Alabama, these aircraft rely on a web of imported parts. This includes large components of CFM engines, which are made in a joint venture of GE Aerospace and France’s Safran, potentially exposing elements of United’s supply chain to tariff risks.

Comparison with Industry Peers

United’s approach to its earnings forecast stands in contrast to some industry peers. Delta Air Lines, which reported its quarterly results last week, said it could not reaffirm its full-year outlook, citing uncertainty in the market. This divergence in communication strategy highlights different approaches to managing investor expectations amid economic volatility.

Delta’s CEO, Ed Bastian, also took a firmer stance on the tariff issue, stating that the carrier won’t pay new tariffs on its Alabama-assembled Airbus aircraft and would defer any of that manufacturer’s planes affected by new taxes. United’s more measured response suggests different assessments of the tariff risks or varying degrees of flexibility in fleet planning.

These different approaches reflect varying business models, network structures, and financial strategies across the airline industry. United’s significant international exposure and growing premium business provide it with distinctive resilience factors that support its maintained earnings forecast, even as it acknowledges potential recession risks.

Second Quarter and Future Outlook

Looking ahead to the immediate future, United Airlines provided a second-quarter earnings forecast of $3.25 to $4.25 adjusted earnings per share, in line with analyst estimates. This guidance reflects the carrier’s confidence in continued strong demand for premium-cabin bookings and international travel through the summer travel season.

The airline also noted that future bookings over the past two weeks have been stable, suggesting that despite economic concerns, travel demand isn’t experiencing a precipitous decline. This stability provides some reassurance regarding the carrier’s full-year earnings forecast, though the company remains prepared for potential economic deterioration.

United Airlines plans to adjust its domestic capacity while maintaining international routes, a strategy designed to align with current demand patterns and support its earnings forecast. (Image: Representative)

United’s dual forecast approach demonstrates both prudence and transparency in the face of economic uncertainty. By providing a clear view of potential outcomes under different scenarios, the airline gives investors a more comprehensive understanding of the company’s potential performance range for 2025.

As the year progresses, United’s performance relative to its earnings forecast will serve as a valuable barometer for the broader airline industry and potentially for the U.S. economy as a whole. The bifurcation between domestic and international travel trends, along with the resilience of premium segments, provides important insights into consumer behavior during this period of economic uncertainty.

Published on April 19, 2025 | Updated on April 19, 2025