United Reports Surprisingly Good Financial Results, Plans Capacity Cuts

Its airline earnings season, and last week, Delta became the first US airline to report its Q1 2025 financial results. The results were exactly what we expected based on updated (lowered) guidance, and Delta management was rather upbeat, despite all the uncertainty right now.

United has now become the second major US airline to report its Q1 2025 financial results, and the airline has painted an outright rosy picture about its performance and outlook, even in the event that the United States goes into a recession. While Delta matched its results during the same quarter last year, United far exceeded last year’s results.

United has strongest Q1 since start of pandemic

For Q1 2025, United has reported pre-tax earnings of $478 million, with a pre-tax margin of 3.6%. Adjusted pre-tax earnings were $391 million, with an adjusted pre-tax margin of 3%. Meanwhile United had record first quarter revenue of $13.2 billion (compared to $12.5 billion last year), and total revenue per available seat mile (TRASM) growth of 0.5% year-over-year.

United’s Q1 pre-tax margin was up 4.9% year-over-year (and 3.6% on an adjusted basis), beating Wall Street expectations. During the same quarter last year, United had a $164 million pre-tax loss, so that’s quite an improvement.

The company describes this as its best first quarter financial results since the start of the pandemic, despite a challenging macroeconomic environment.

Like other airlines, United is seeing a reduction in domestic economy demand, and unit revenue for domestic flights fell 3.9% compared to the same quarter last year. However, everything else is looking better than last year, with unit revenue from international flights increasing by 5.2%. United highlights how loyalty revenue increased 9.4%, premium cabin revenue increased 9.2%, and business revenue increased 7.4%.

Here’s how United CEO Scott Kirby described these results:

“Our strategy coming out of the COVID pandemic was simple: Build the best airline in the world to attract brand-loyal customers. The people of United Airlines have executed and built that airline. United Next is on track and we 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. Our ability to win brand-loyal customers and the resiliency of our business is a competitive advantage, and we are accelerating our investments in our product, service, technology and experience to further expand that lead.”

United reducing capacity to deal with uncertainty

United has called the economy “impossible to predict,” though has also stated that booking trends are stable. In response to the current demand environment, United is removing 4% of scheduled domestic capacity starting in Q3 2025.

This basically seems to be the same narrative you’ll find at all airlines, where their biggest concern is what domestic demand will look like after the peak summer travel season (which ends around the middle of August).

United is also making adjustments to the utilization rate of its fleet, including ongoing reductions in off-peak flying on lower demand days. The airline expects to continue this approach into Q4 2025. As previously announced, United plans to retire 21 narrow body aircraft earlier than previously planned.

The company has left in place the guidance that was provided in January, of full year earnings of $11.50 to $13.50 per share. However, in the event of a recession, the company believes that earnings per share will be $7 to $9.

United’s CEO has argued that the company’s fundamental evolution coming out of the pandemic positions it to have industry leading margins in good times, and he even believes the airline will expand its lead further during challenging economic times. Of course time will tell if that proves to be true — he’s kind of vested in that being true.