United Airlines (UAL) has reported its second quarter (Q2) 2022 financial results, with a headline achievement being not just its first profitable quarter since Covid-19 began, but the highest Q2 revenues in the airline’s history – and all this despite record-high fuel prices of around US$4.18 per gallon in the quarter. UAL says the Q2 results, combined with continued progress the airline is seeing, are giving it confidence in achieving long-term adjusted pre-tax margin targets of approximately 9% in 2023 and 14% in 2026.
Q2 saw operating revenues rise by 6% versus the same quarter in 2019 (total operating revenue of US$12.1 billion, up 6% compared to Q2 2019), and United expects to see sequential improvement in the third quarter. The airline also recorded record-setting TRASM (Total Revenue Per Available Seat Mile) figures, up 24% versus the same quarter in 2019, and it expects a 24-26% improvement in the third quarter over third quarter 2019.
Q2 revenue improved at what UAL calls “a rapid pace”, and while the airline anticipates the economy will slow in the near to medium term, it says the continuing pandemic recovery is more than offsetting economic headwinds — leading to expected revenue and earnings acceleration in the third quarter. As a result, the company continues to expect to be profitable for the full year 2022. Additionally, even as the industry faced several operational challenges throughout the quarter, United says it performed well and, with the exception of Newark, had operating results largely in line with 2019.
“I am grateful to the United team that has fought through severe systemic challenges impacting all of global aviation to serve our customers,” said United Airlines CEO, Scott Kirby. “It’s nice to return to profitability – but we must confront three risks that could grow over the next 6-18 months. Industry-wide operational challenges that limit the system’s capacity [UAL’s capacity was down 15% compared to Q2 2019 ], record fuel prices and the increasing possibility of a global recession are each real challenges that we are already addressing. These fundamental challenges have already led to higher costs, higher fuel prices, but also higher revenue, which means we’re as confident as ever we will deliver on our 9% adjusted pre-tax margin target in 2023.”
In terms of operational performance, United recorded inflight satisfaction for on-time flights at their highest historic level, achieving 80% for the quarter. Further positive sentiment was created by the airline’s cargo operations which in Q2, through a combination of cargo-only and passenger flights, transported approximately 275 million pounds of freight, including Covid-19 vaccines and other essential supplies, which included nearly 33 million pounds of vital shipments, such as medical kits, personal protective equipment, pharmaceuticals, and medical equipment.
A few new passenger experience enhancements were also introduced in Q2 2022, including a new 30,000 sq ft United Club lounge at Newark Liberty International Airport, new custom amenity kits for United Polaris from Away, a collaboration with Spritz Society to offer complimentary premium cocktails on flights from Chicago to Milan and Newark to Rome, and in select United Clubs, and new plant-based menu items from Impossible Foods.