United Airlines stocks climb on solid Q2 guidance

Shares of United Airlines Holdings, Inc. ticked higher on Wednesday’s extended trading session as it expects to turn a profit in the second quarter.

The Chicago-based airline soared 7.59% or 3.53 points to $50.05 per share. It followed an upturn of 1.24% or 0.57 points to $46.52 per share in the regular hours market.

Accordingly, United Airlines anticipates the surging travel demand to generate the highest quarterly revenue in the firm’s history.

This upbeat forecast suggests carriers are at a turning point in the pandemic recovery. It came amid the drop in COVID-19 cases, spurring renewed demand for travel.

In addition, the public has not yet moved away from higher ticket prices, despite inflation and mounting household costs.

The passenger traffic in the United States has been 89.00% of pre-pandemic levels since mid-February.

In line with this, the major airline expects to report a profit this year. Subsequently, it projected revenue per available seat mile to be up 17.00% year-over-year in April-June.

This forecast translated into an adjusted operating margin of 10.00% and the highest quarterly sales in its history.

The robust consumer demand enables carriers to deal with the soaring energy products costs. The firm’s fuel bill in the first quarter was 20.00% higher than the previous quarter. Moreover, it projected prices to increase by 19.00% quarter-on-quarter in the three months to June.

However, United Airlines needed to exert efforts to add capacity. Some of the biggest planes in its fleet would not return until May due to an engine failure.

Consequently, the company suspended the deliveries of new Boeing 787 Dreamliners in the past 18 months because of manufacturing flaws.

The airline also faces a pilot shortage, specifically at regional carriers that feed its hubs, a problem across the sector.

United Airlines reports $1.4B Q1 loss

Meanwhile, United Airlines’ upbeat forecast overshadowed the larger-than-expected Q1 loss of $1.38 billion. Eventually, its revenue declined to $7.57 billion, lower than the $7.68 billion.

The first quarter significantly weighed down the airline industry, dominated by the omicron coronavirus variant in the early weeks.

The virus has already waned, and caseloads across the US have notably declined. In line with this, analysts foresee a strong spring as restrictions disappear and more people travel.

However, some carriers like Spirit, Alaska Airlines and JetBlue Airways plan to trim their schedules. This move will provide room to navigate disruptions like bad weather or staffing shortages.

Then, American Airlines reminded its staff last week that reliability is paramount this season. Last year, carriers grappled with routine disruptions and staffing shortfalls.