United Airlines says a key financial metric it uses to track earnings will trend positive in June for the first time since the pandemic, ahead of schedule and another sign that demand is surging for air travel.
United Airlines Expects Positive EBITDA In June
United expects a positive EBITDA in June. EBITDA is “Earnings Before Interest, Taxes, Depreciation, and Amortization.” In short, it is how much money a company makes without including interest and depreciation expenses.
While United is paying $350 million per month in interest and depreciation expenses, take that away and United expects it core operation to be profitable starting next month. That’s a huge step forward and a widely-used metric to gauge a company’s financial health.
Of course United is not profitable…not even close when debt servicing, capital expenses, and taxes are factored in. But United CEO Scott Kirby told employees, “We are on the right road and we will get back to where we were.”
Kirby noted that domestic leisure travel “is going gangbusters” and consolidated yields on tickets issued this month for travel this quarter have reached levels similar to 2019. Factoring in purely domestic tickets, yields are higher than they were in 2019. United plans to add more domestic flights next throughout the summer in response to the growing demand.
Meanwhile, business travel is down 75%. Kirby expects it to fully recover, but believes it will remain depressed over the summer, beginning to pick up steam again in the autumn.
Longhaul travel will remain depressed, with the exceptions of certain pockets of Europe which will be open to U.S. citizens this summer (that may include the entire European Union, but will at least include France, Greece, Iceland, Italy, and Spain).
As for when the break even point and return to profitability will occur, Kirby says he is “unsure at this point.”
EBITDA turning positive is another positive metric in charting the comeback of the airlines industry in the USA. While debt, capital expenses, and taxes cannot simply be eliminated from the calculus, United is expected to run profitable operations again beginning in June from an EBITDA perspective.