After almost three years of loss-making, United airlines reported its first quarterly profit this week. The airline achieved a record-breaking profit in the second quarter of 2022, producing a greater Q2 profit than any previous year. The airline has improved on 2019 stats, despite carrying 15% fewer passengers and paying almost double for fuel.
United saw a net income of $329 million in 2Q22, a significant improvement from the $434 million loss made last year. “It’s nice to return to profitability,” says CEO Scott Kirby, who is confident that profits will continue to increase as the year progresses.
Profits Increase Despite Reduced Capacity and Higher Fuel Costs
United’s total operating revenue is 6% higher than it was for the same quarter in 2019, despite capacity being down 15% in the same period. On top of that, the airline achieved a record total-revenue-per-seat-mile (TRASM), up 24% on 2Q19.
The peculiar trend also comes at a time when the airline is spending more money than ever on fuel. United spent $3.81 billion on fuel this last quarter, compared to 2.38 billion during 2Q19. The airline is paying almost double the price for Jet fuel, at $4.18 per gallon compared to $2.16 before the pandemic.
Airline CEO Scott Kirby cites fuel as one of the three main challenges United faces in the next year.
“Industry-wide operational challenges that limit the system’s capacity, 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.”
The airline expects profits will keep increasing into the third quarter of this year. They predict total operating revenue to be up 11% on 2019, and up to 26% on TRASM, compared to the 6% and 24% achieved this quarter.