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
American losing a high roller like myself and United gaining my business apparently tipping the scales. Other than a longer boarding time my first trip with United was good. Going from boarding groups 1-2 with American to group 5 with United will take some getting used to. Seeing older 737s with the bell bottom engines was gnarly. I did not eat a stroop waffle. I’m going to make myself earn it.
thank you for covering UAL’s earnings
UAL made the right move to be ready to capture international demand when it returned post covid. International travel has been strong and AAL DAL and UAL have all benefitted. The Pacific has never been as profitable for US airlines which is where UAL has the biggest lead – UAL is about twice the size of DAL over the Pacific while DAL is twice the size of AAL. Over the Atlantic, UAL overtook DAL in size but the Atlantic includes the Middle East, Africa and India. DAL does not currently fly to the Middle East (it returns to TLV but still does not have definite plans to return to the Arab Middle East or India). DAL is about the same size as UAL to Europe and larger than UAL to Africa as well as to Latin America.
UAL is about 90% of AAL and DAL’s size domestically (all of these comparisons are in revenue)
If the fear of visiting the US really materializes, it will hurt UAL disproportionately more than AAL or DAL. Also, some reports say there is more anti-US sentiment in Germany than in France, the Netherlands or the UK where AAL and DAL have larger TATL operations. The US-Europe trade deficit is most concentrated in Germany so it would not be a surprise if Germany does push back more at the US.
UAL has done a great job of improving its revenue performance.
but a big factor in profits is that nearly all non-pilot unionized UAL labor groups have or will have amendable labor contracts by summer including FAs and mechanics, both of which are fairly vocal labor groups at any airline. If UAL can get by with paying $1 billion/yr less for labor than AAL, DAL and LUV, all of which have raised labor rates, then by all means UAL should play its people. But I doubt that UAL employees are interested in subsidizing the company’s success at their own personal cost.
as for guidance, the recessionary guidance is about 2/3 of the “normal” guidance and UAL still expects to pull down capacity after the 2nd quarter, when outbound US international tourism diminishes.
UAL has done a great job of turning its revenue performance around but their results are not comparable to DAL’s or AAL’s or LUV as long as UAL people make considerably less.
“UAL has done a great job of turning its revenue performance around but their results are not comparable to DAL’s or AAL’s or LUV as long as UAL people make considerably less.”
Except that they’re very comparable. In terms of leverage, United corporate holds basically every card for union negotiations at the moment and given how the NMB works, they will for the following 4 years. There isn’t a “Non-Gaap” asterisk called “oh but wait. our flight attendants made less than AA’s flight attendants”.
Just say congrats to United. Great quarter for them and they’ve clearly overtaken Delta in financial results, for now, even without the enormous Delta financial benefits of monopoly hubs, incremental credit card deal, or a largely non-union workforce. There are plenty of adjustments we’d make to make results “comparable” if that was the goal — like removing the impact of Delta’s refinery.
United is doing what everyone thought they were capable of at their merger, taking very wealthy hub markets where they compete but making a profit off them. Even Delta doesn’t claim to make their profits off their coastal markets, they’re clear their profits come from the “Core hub” Monopoly hubs they have. Give United their due. This was a very impressive result to take over Delta in financials, we’ll see if it lasts the full year. There are plenty of places UA wide bodies could go to make money. The big financial disadvantage to doing that (shorter stage lengths), increased cycle checks, wouldn’t show much of a financial impact for 2-3 years.
except that UAL people DO make less – and it isn’t just that UAL paid profit sharing HALF of what DAL paid in 2024.
Ask any UA FA or Mechanic how their salary compares to AA, DL and WN. They know. and airlines DO report their labor costs to the DOT – and the average can be fairly roughly calculated even from 10Ks and 8Ks.
I always said that AA AND UA should be generating comparable revenues. UA has heavily copied DL’s strategic playbook – just built it on a more heavily international network.
and UA flies about 8% more capacity than DL but delivered only about 2% more passenger revenue.
Credit card deals? DL didn’t invent it but has managed to perfect it so far.
DL has provided the financials w/ and w/o the refinery since they day they started operating it. Not doing near as much benefit but has delivered several billion dollars in savings. DL’s cost per gallon was the better part of a dime less than UA in the most recent quarter.
deregulation happened almost 50 years. If DL managed to grow monopoly hubs that drive its revenue, why hasn’t AA or UA?
In reality UA has market shares at EWR, IAH, IAD and SFO as high as DL has ATL, DTW, MSP and SLC – and those UA hubs are larger revenue markets than DL’s.
DL simply has higher market share (and lower operating cost) hubs at ATL, DTW, MSP and SLC while UA has the market share advantage at their largest international hubs – and that follows through to their domestic operations at those airports.
DL and UA in many ways are mirror images of each other as much as you want to believe otherwise. DL just happens to pay its people more while UA is holding on as absolutely long as possible to increase its non-pilot employee pay.
and the mere fact that you say that “UA holds all the cards” proves you know that UA is taking advantage of its unions’ weakness.
Learning to read what others write is a helpful skill, Tim. When you just reply with your usual talking points absent replying to what a user said, you simply reinforce why you’re likened to speaking with a brick wall.
Again, “we’re paid less” isn’t a non-Gaap metric just like “non-union workforce financial advantage” is not either. And again, nothing obligates United to get a pro-Union deal the way the United unions would’ve likely had one under the previous administration. United holds all those cards. For better or worse, the Unions no longer do. Sara Nelson squandered her opportunity by getting APFA a deal instead of her own AFA a deal.
And you know as well as anyone that there’s a very big difference in ATL, DTW, MSP, SLC vs EWR, IAH, SFO, etc. The pricing difference between a monopoly with ZERO geographic competition is much different than an airport with 1 or several nearby competing airports. But your usual attempt to obfuscate that with a lot of text is no surprise.
Aka. Delta and their cronies actively work to prevent new competing airports while also taking every opportunity to prevent new competition at existing monopoly hubs (i.e. when QR “dared” start service to ATL). Every United hub has either large competition at the hub specifically or other airports that directly compete with that hub airport.
But I’ll just reiterate my original point. Delta lost the margin battle, but just for one quarter, for now. Just relax and be excited for UA employees and those that love United.
A simple “Great job United” is all you need to say. Without Question, United has turned around their perception and margins in a way few have. Even if they end up paying their unions more in the future.
Frankly, the depressed wages probably make United and Delta somewhat equal on the margin front given how much union contracts generally lower employee productivity for any number of reasons, good and bad. Why else do you think Delta spends so much money preventing unionization?
Defending Delta the way you do ad nauseum just makes you pull out your VERY TIRED talking points you use all over the internet… well, used to use all over the internet.
in the amount of time you wrote that post you could have done a couple calculations directly from DAL and UAL’s public financial statements.
Including profit sharing, UAL employees are paid 7% less and DAL’s salary and benefits line includes Endeavor employees whose company is wholly owned and do not get profit sharing.
As hard as it is for you to admit, UAL employees are paid significantly less an din order to close the gap, UAL’s labor costs will have to go up about $1 billion per year ON TOP OF RETRO.
adding $1 billion to UA’s labor costs cuts their margins significantly.
you can argue and you can denigrate people that point out the obvious but numbers don’t lie.
UA is taking advantage of its labor cost advantage to grow and it is only as long as UA employees are willing to accept being underpaid that UA’s higher margins will continue
just a couple more points.
DL settled with its unionized pilots FIRST among the big 4 post covid and did so for about twice what UA offered in the proposal UA’s own pilots shot down.
DL was the first carrier to lift salaries of all other workers post covid.
DL knew all along that high labor costs would squeeze some competitors and that has absolutely been the case.
As for airports, you simply are throwing dirt. Every single DL hub provides access for any new carrier that wants to start service, just as at AA and UA hubs.
and UA’s hubs have the highest operating costs of any of the big 4 carriers. Gaining a larger position at ORD is not a huge advantage when DFW,DTW and MSP have costs per enplaned passenger at one-third the rate ORD has. ATL and CLT are even lower.
UA is spending more on airport terminals to carry more domestic passengers but UA’s airport costs will be higher. AA and DL and WN all invested in building airports that can carry large amounts of connecting passengers years ago at lower construction costs.
it’s basic economics and there are facts to support it all
And in the two attempts you used to reply to me, you could’ve read what I said and realized I never once said UA FAs/Mechanics were paid more, profit sharing or otherwise.
Reading before replying with your usual talking points is always helpful.
“and UA’s hubs have the highest operating costs of any of the big 4 carriers. Gaining a larger position at ORD is not a huge advantage when DFW,DTW and MSP have costs per enplaned passenger at one-third the rate ORD has. ATL and CLT are even lower.”
Again. Read…
We agree that United’s accomplishment on margin is all the more impressive given their lack of monopoly interior core hubs with low costs like Delta.
It should impress you that UA beat Delta on margin without low cost hubs, absent a credit card deal, and with an all union workforce.
Instead, you’re agreeing with me but arguing about it for some reason..
Read before you write, Tim. You really were hitting the refresh button frequently today to reply that quickly.
All the best.
I read exactly what you wrote and I replied because you write contradictory messages.
You can’t say “yes, you are right. UA’s unwillingness to update its labor contracts probably is the reason for its higher margins” (which is true)
and then say
“just celebrate with UA employees who closed the gap even if for one quarter”
Newsflash
99% of UA and DL and everyone else’s employees could care less about how much their company makes.
They don’t care whether UA adds flights to Greenland or Mongolia or DL adds a 12 bank of flights to Atlanta.
They ALL care first and foremost about what they get paid.
and on the core point, UA’s employees get paid about 7% less than DL employees just based on the 1st quarter.
UA employees are not interested in hearing Kirby say for another time “We have great employees and will pay them well” and then hear YET AGAIN “we are close on the FA contract”
When UA settles with ALL of its labor groups and their salary ranking is proportional to UA’s profit ranking, then there is reason to celebrate – and I will happily tip my hat to them.
But not a quarter before.
“You can’t say “yes, you are right. UA’s unwillingness to update its labor contracts probably is the reason for its higher margins” (which is true)”
I don’t say it and I don’t agree with it because that view is pretty useless under the new administration and new NMB. That was probably true in 2024. It isn’t now.
And I also don’t say it because every quarter of every year, Delta is given a VERY large margin benefit by lack of unionization at nearly their entire company. I don’t try to knock Delta every quarter for that financial benefit, why would I knock United for having Unions in one of the few financial ways Unions can benefit a large company — the inability of a Union to get over themselves and get a contract and holding out for something that may or may not materialize, in this case, it did not materialize and likely won’t in the IBT or AFA’s favor with the new NMB members. It’s rather amazing that Sara Nelson’s members haven’t fired her yet given how she got the AA Flight Attendants a new contract while ignoring her own. It was a flawed strategy from the start and she blew it.
Delta almost always has a huge financial benefit from a non-unionized workforce. You love to cloud that benefit by talking about salary only while ignoring non-salary pieces of a contract and the ability of Delta to fire at-will with no questions asked. When you start admitting that in every quarterly post about Delta margins, I’ll start agreeing with you.
But again, of course United has two workforces without pure wages equivalent to AA or DL (a month ago you were screaming that AA didn’t have new contracts either but seemed to have no knowledge on this topic since they have for quite some time now), I simply disagree with your premise — That under the current NMB, those unions have the leverage much of anything without some potential concessions. If you look at what Oscar Munoz did to get the initial CO-UA JCBA, he gave up A LOT of the sCO productivity metrics in their contract just for the sake of a contract. I hope United makes a go at getting some of those back — they’re not even concessions.
I’m aware of the status of contracts. As mentioned above, you didn’t seem to have any idea about the current status of AA union contracts a very short time ago and kept spouting nonsense. So you’ll pardon me if I think your current spiel is just drivel because it is. Delta always has a margin benefit from non-unionization so why would I want to asterisk United’s current margins because of the Union mediation process working the way it always has, SLOWLY.
I’ll also note and thank you for giving up on your nonsensical attempt to equate DL’s core hub profitability with United’s hubs that have real competition at the hub and at surrounding airports in the same metro area.
Again, and we agree, it is impressive what United has done without what delta calls their “core engine of profitability”, monopoly hubs.
Max,
First, ONCE AGAIN, DL offered a contract TO ITS UNIONIZED pilots that was twice as good as what UAL offered and DAL became the first of the big 4 to settle w/ its pilots. The notion that DL only pays its non-union employees well to keep out unions is patently false.
Of course, Delta gets a productivity benefit from having a largely non-union non-pilot workforce. You can see that in the number of employees DL has vs. AA and UA. But DL has also pushed labor-efficient strategies such as upgauging and reducing regional jets so there are other reasons besides labor productivity.
And you love to talk about the job insecurity that DL non-union employees have – but when you come back w/ actual data comparing DL’s rate of firing to AA or UA’s or WN’s, let us know. I have we will see this is just another of your cooked up excuses.
And you are right that UA gave up some of CO’s labor efficiencies and UA is trying to get that genie back in the bottle – which is not easy.
WN learned the lesson of labor efficiency when it started but its labor costs have ballooned to a higher percentage than the big 3. Unions invariably “choke the goose until it lays the last egg”
DL is much more labor efficient and gives it back in the form of higher salaries and benefits, including profit sharing.
UA employees would undoubtedly trade better efficiency for higher pay – but that isn’t what unions want.
Of course, DL employees are happy to have higher pay and benefits w/o the nuisance of unions. And DL pilots very much know that DL loves to remind the pilots how much being unionized costs them.
Like I said, tim
All the best
You seem to know very little about union issues.
Why would you. You’re a guy fired by delta that weirdly has a love for them.
Lord knows what you’re trying to say with your first point.
United pilots have a contract and are paid well
Using a ratified United contract as proof that you’re right is just idiotic, at best. Delta ALPA does tend to lead the way because delta is so bad at negotiating with them.
ALPA isn’t dumb. They know how to negotiate, delta first then others.
That you don’t know that is just weird. It’s well known that alpa does a delta deal first because of how inept delta is at negotiating since it’s their only union of consequence.
But again. How you respond with paragraphs when you’re wrong is beyond me
But I admire your persistence
All the best
Try not to use fake profiles on this site.
I’ve replied enough, there’s a reason no airline hires you, only fires you (delta).
as usual, you result to name calling, peddling lies and making charges of fake names when it is you that uses some made aspirational name that is at best, a dream, and far distant from reality.
Once again, DL gave its pilots a contract worth twice as much as what UAL offered and its own union sent out to vote.
It is UA’s unions that are bent over by UA management. Why should UA want to pay its employees better when they can get by with paying their people 7% less – which might be about half of the level of inefficiency that UA’s labor unions impose on the company.
Bottom line, whether you can accept it or not, is that UA’s profits do not reflect the labor costs that DL pays – and that is equally true for other airlines including WN – which is labor heavy right now.
DL simply understands that well-paid employees also deliver better service – which is why DL has led the industry in operational and customer service metrics for years.
alot of UA’s growth won’t work at higher labor rates – and they certainly won’t make as much on the bottom line if they pay their people top tier salaries.
Quit arguing. and admit that I was right from the very beginning. the level of UA’s profits are directly related to its lower paid employees.
No charges of fake names
Just repeating what the owner of the last banned website said that you did exactly that, that you used fake names and are banned , just like everyone said you did. You seem to find yourself overly clever. You aren’t. A.net banned you for your repeated attempt to rejoin under fake names, others now have too.
You aren’t that clever, pal.
Lie as you want. It’s about all you’re good at. Some know your past.
No need to reply to your usual drivel. You don’t read to reply anyway. You reply to be an asshole.
And that’s about it. You don’t read what I write anyway. You argue even when you’re at the height of agreeing then seem mad that you did just that.
If only you were able to converse normally, maybe then you wouldn’t spend your entire day in a comment section desperate for attention. How many places banned you and you still find a need to post somewhere you said you’d never post due to your weird need for attention?
Grow up.
If you want adult conversations, then reply to what people say, not what you wish they’d said to fit your pre written narrative.
you prove you are unable to walk away and you are incapable of dealing w/ the facts so you engage in character assassination.
Ben can’t stand that anyone told him that he faces a long four years…. that is why he went from baiting him in his articles to wanting me gone.
You and everyone else is free to harp on all of the websites I have been on but you REFUSE to acknowledge the actual facts of this and many other articles.
UA employees are underpaid despite having unions.
DL employees are paid 7% more based on 1st quarter financial data.
DL pays its employee – union and non-union well because it realizes that well-paid employees deliver for the company.
UA execs brag endlessly about all of the new cities they are adding – but it is the same ole non-sense about that union contract settlements are just around the corner.
the only person that needs to grow up is you.
You said you would walk away now do it.
UA underpays its people in order to boost its profits. It dazzles new destinations that 99% plus UA employees will never visit to wow them.
EVERY employee of every company wants their interests first AND THEN what what is good for the company. UA dazzles with superficialities hoping its people forget that they underpaid compared to their peers – and more UA people live in high cost areas than any other big 4 airline.
walk away, Max
“ 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.”
Not good for the (false) narrative that foreigners won’t come to the United States for political reasons.Unless one wants to believe US travelers headed overseas are more than making up for the decrease at a level to increase overall 5%.
I wish Tim would get banned here too.
…which simply highlights how much UAL management types have infiltrated airline social media.
If the facts are correct, then they deserve consideration.
If they are not, then feel free to address them.
UAL has done a great job on improving revenue which isn’t a surprise considering that UAL underperformed its potential for years.
UAL IS paying its people considerably less than AAL, DAL and LUV. Only UAL management types would want to silence the reality of how much UAL’s earnings will fall when they settle w/ all of their non-pilot unionized workgroups.
@Chuck, that is not constructive. Tim makes a reasonable point about labor costs, right? I even made the same point in my story.
He beats the same drum in every post regardless of what the topic is. He reaches the point of trolling more often than not.
His assumption that I’m United management couldn’t be further from the truth.
chuck
the only drum I beat is factual and complete accuracy and staying on topic. Matthew did a pretty good job of covering the topic. If you could reply to either what he or I say, rather than who wrote it, that would be great.
and the completeness I include is that UAL has done a great job of expanding and improving its revenue even though DL has a richer credit card deal.
But int’l has never been as consistently profitable for US airlines as domestic has been – which is why DL has long viewed international differently.
and UA, by its execs own admissions, has learned alot from DL which wrote the post 9/11 book on being sustainably profitable.
specific to earnings, UA will have to deal w/ paying its people substantially less than DL employees – including half of the $1.4 billion in profit sharing that DL paid last year.
It is only a matter of how long UA employees are willing to wait before UA has open its pocket to its employees.
You flood numerous board with the same stuff. It’s really off putting.
I love the Dickens reference, but perhaps a better title would be, “It’s the best of times, and even if it isn’t, hey, it’s not the worst of times!”
Indeed, that would have been better.
I still think the worst of times are coming…but I sure hope I am wrong!
UAL is in a “gates” share battle with AAL in her hometown Chicago airport, and market share battle with Southwest at Denver. Also, UA is adding flights at SFO. I wonder how could UA cutting flights in Q3 without the battle?
Missing a crucial word
…..without “losing” the battle?
I have long believed that DAL and UAL’s networks would increasingly look alike – different hubs but similar structure – if both are really similarly profitable in their strengths.
UAL will grow into domestic because DAL is most profitable and larger there – AAL and LUV less so but there is clearly money to be made in the domestic market.
DAL will grow in international including in the Pacific and the Middle East and India if UAL can be consistently profitable there.
DAL has used post covid to dramatically improve the efficiency of its international fleet – and, if they go ahead w/ taking the A350-1000, there will be another large leap. UAL stayed in the game and kept growing but its fleet efficiency is one of the lowest of large major airlines by retaining such a large fleet of 777-200/ERs. The 359 is still larger than the 787 which means that DAL can help close the cargo gap w/ UA which is directly tied to UA’s much larger size in Asia.
DL is retiring 767s – still has more than UA – but DL continues to replace them w/ newer, larger and more efficient aircraft.
Fleet is part of the puzzle but fleet matters more on the Pacific than anywhere else where Asian carriers have such a large labor cost advantage.
and in the first quarter, DL’s domestic and international systems both grew at 4%. UA’s domestic system grew at 8% while its international system grew at just over 1%. both are growing where they see opportunity… for DL it just happens to be balanced while UA is heavily focused on domestic growth.
If the lower end of domestic demand is weak for the near future, UA will have a harder time growing. If int’l demand takes a hit, DL will have to forego int’l growth but will still have a pretty balanced and profitable system – which is about 8% smaller than UA’s total system as of this quarter.
The domestic space was showing signs of overcapacity even before the current administration decided to commit economic suicide. Throughout Covid and the recovery period from it, many were predicting doom and gloom for long haul international travel and most airlines added capacity to low-yielding leisure destinations such as Florida. Now we have higher costs and 2 new ULCCs in the market. Something is going to have to give through either consolidation or liquidation and the current turmoil might be the thing to force it.
United has made it to the top by focusing on its strengths and investing in long-overdue growth in these areas. They are the best-positioned to grow long haul international travel, and their domestics travel has mainly consisted with filling out the hubs. I hope the current management continues the momentum and doesn’t entertain distractions like the rumored opening of a southeast hub, which UA does not need and will only serve to cannibalize the profits in the rest of the network à la Delta in SEA.
Especially now, I’d say the chances of a FLL hub are zero (we’re much more likely to see UA acquire B6).
Gee, I wonder whether our dear leader will suddenly make a complete reversal and embrace economic stability? Odds?
What is lost in this whole discussion is that DL and UA are the only two US airlines that will post acceptable profit margins. UA execs have said their costs will go up as they settle w/ unions. It will simply take time but UA has no choice if it doesn’t want to reopen the decades of labor discontent that has marked airline labor relations in the US, esp. w/ AA and UA which Oscar largely eliminated at UA.
as the rest of the industry reports, it will be clear that 60% or more of the capacity in the US is operated by airlines that are not economically sustainable.
AS is the next best candidate to be in DL and UA’s profit category but they face a lot of risk integrating HA as the economy weakens and also venturing into longhaul international flights from SEA, already a highly competitive int’l market. The Virgin America merger pulled AS’ margins down for years.
AA has been economically flying just above the surface for years. The revenue it carries is more than enough to sustain DL and UA’s growth for years. AA is the most susceptible to high labor costs while its revenue generation significantly lags DL and UA and there appears to be no clear plan to address that. Finally offering free WiFi only slows the bleed of high value customers.
WN desperately has to turn things around this year but that is a big IF esp. as domestic leisure demand weakens.
the rest of the LCCs and ULCCs are not economically viable but they are doing less to turn themselves around than WN.
Further industry consolidation is likely.
UA execs have specifically said they would be open to an acquisition of B6 – all, of course, dependent on whether the DOJ is willing to allow the big 4 to acquire. If UA, which touts itself as the world’s largest carrier, can acquire any airline, then any other combinations have to be considered possible.
A UA acquisition of B6 would certainly cause DL to step up its presence in UA hubs including EWR; DL and UA have largely succeeded by finding places to grow other than in each other’s backyards.
AS and WN both have strong networks but weak management teams now. Any number of combinations could put AA and WN in the hands of more capable mgmt teams.
as the rest of the industry reports in the next 2 weeks and as the economic reality of where the US sets in, it will be very interesting to see the trajectory of each US airline.
DL and UA clearly seem capable of succeeding in the current environment but that can hardly be said for other airlines