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United Airlines Sees Adjusted Third Quarter Profit as Demand Improves

United Airlines said that while business travel remains "significantly depressed", improving demand and higher ticket yields should nudge the group into a third quarter profit.

United Airlines  (UAL) - Get Report said Tuesday that ticket yields for the current quarter are returning to 2019 levels, but overall capacity is still expected to be down nearly 50% from pre-pandemic tallies.

In a Tuesday filing with the Securities and Exchange Commission, United said its expects to have a positive profit margin by June, with an overall second quarter margin of -11%, around 9 percentage points inside its prior forecast. The carrier also noted that while business travel remains "significantly depressed", it expects to post an adjusted third quarter profit as overall demand improves. 

"United has experienced an acceleration in ticketed yields for the second quarter, ahead of previous expectations," the carrier said. "As of the date of this report, consolidated yields on tickets issued since the beginning of May 2021 for travel in the second quarter 2021 have reached levels similar to 2019, with domestic leisure yields exceeding 2019 levels for the same time period."

"As a result, the Company now expects Total Revenue per Available Seat Mile (TRASM) to be down around 12% for the second quarter 2021 versus the second quarter 2019," United added. "This compares to previous guidance of down approximately 20%."

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United Airlines shares were marked 2.44% higher in pre-market trading Tuesday to indicate an opening bell price of $57.50 each. 

Last week, the Transport Security Administration said it screed more than 1.85 million travelers at domestic airports, the highest total since the pandemic began in March of last year, with analysts looking for a 2 million tally over the Memorial Day weekend. 

United, in fact, boosted its domestic and European schedules by around 400 flights earlier this month, and noted that summer travel bookings are up 214% from 2020 levels.

Planmaker Boeing  (BA) - Get Report, however, has cautioned that it doesn't expect global airline passenger traffic to return to 2019 levels for at least another two years, adding that airline customers continue to adjust their operations and fleet planning based on those projections.

That view was echoed by the head of the International Air Transport Association lobby group, Willie Walsh, who told reporters in Dublin last week that staff cuts and a dearth in new aircraft supply means the "ability for the industry to recover to the 2019 levels of capacity quickly is now impossible", adding the return may in fact take several years.