United Airlines’ Tale Of Two Profit Forecasts

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, and for United Airlines, it is the tale of two profit forecasts–a rather novel approach to hedging your bets in a rapidly changing world.

United Airlines Reports Best Q1 In Five Years, Provides Two Profit Forecasts For 2025 Based On Macroeconomic Conditions

In an unusual move, United Airlines has updated its full-year profit forecast for 2025 and provided two scenarios: it expects a profit of $11.50 to $13.50 per share in a “stable environment” or $7.00 per to $9.00 per share in a “recessionary environment” (on an adjusted basis). Any further clarity at this point, United says, is “impossible.”

“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.”

Continuing a trend hinted at by CEO Scott Kirby, United reported that international and premium-cabin revenue rose during the first quarter, but domestic coach sales dropped. United also reported future bookings over the past 14 days have been stable, with premium cabin bookings up 17% and international bookings up 5% from the same point last year.

As a result, United will proceed with its previously announced plan to accelerate the retirement of 21 aircraft as part of a plan to trim domestic capacity by 4% starting in the third quarter after the busy summer travel period concludes.

> Read More: United Airlines Will Retire 21 Aircraft, Blaming Plunging Demand

Even so, United CEO Scott Kirby is bullish about United’s long-term growth, arguing United “will continue to execute our multiyear plan that has allowed United to thrive in any demand environment.”

“It has given us industry-leading margins in the good times and we expect to expand our lead further in challenging economic times.”

All this comes as a backdrop to United’s Q1 earnings, which at $387 million profit, or $1.16 a share (adjusted earnings of 91 cents per share), beat expectations and represented a marked improvement from the $124 million loss, or a loss of 38 cents per share, during the first quarter of 2024.

Capacity was up 5% in Q1 2025 versus 2024 and from that, United was able to raise revenue by about 5% as well to $13.21 billion (a bit lower than analyst expectations of $13.26 billion).

Will United Surpass Delta In 2025?

United has been in a chase with Delta Air Lines for top profitability in the US airline industry, pulling ahead of other US carriers as it has upgraded its fleet and grown its international route network even during the pandemic. Even so, Delta has remained the most profitable.

Last week, Delta reported $320 million in Q1 profit on $14.0 billion in revenue. While Delta remains cautiously bullish about its profitability in 2025, it has pulled its full-year profit guidance, citing economic uncertainty.

United still has labor deals to negotiate amongst several work groups that will weigh on profitability once resolved, but if the trend continues of US consumers opting for more international travel than domestic, this may finally be the year United slightly edges out Delta in terms of profitability.

For both Delta and United, though, 2025 is not quite going according to plan…

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way–in short, the period was so far like the present period that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

-Charles Dickens, A Tale Of Two Cities