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Bond Market News

United Airlines Forecasts Q2 Profit and Record Revenues

April 21, 2022

United Airlines (UAL) announced that it expects to return to profitability in Q2 2022 on a strong operating revenue outlook, including total revenue per available seat mile (TRASM) of approximately 17% over 2019, the strongest Q2 revenue guidance in the company’s history, as per Reuters. UAL expects to be profitable in Q2 with around a 10% operating margins just ~2.9% less than 2019, despite cost headwinds of the recent fuel price spike. UAL CEO Scott Kirby said “The demand environment is the strongest it’s been in my 30 years in the industry. We’re now seeing clear evidence that the Q2 will be a historic inflection point for our business. It leaves me more optimistic than ever about United’s future. We have prioritized high operating reliability for our customers by gradually adding back capacity.” For Q1 2022, the company reported total operating revenue of $7.6bn, down 21% YoY, and net loss at $1.4bn. Total debt declined by $700mn during the quarter. UAL’s fuel cost in Q1 was 20% higher than during the previous quarter, leading to a slightly larger-than-expected quarterly loss. For Q2 fuel costs are expected to rise 19% QoQ. Currently, strong consumer demand is allowing airlines to deal with soaring fuel costs, it notes. Data from Cowen shows UAL is passing majorly fuel costs to customers. The airline’s average fare has more than doubled in a year and passenger traffic has been averaging about 89% of pre-pandemic levels.

UAL’s dollar bonds were trading higher, its 4.375% 2026 up over 0.88 points to 96.64 yielding 5.33%.

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