United Airlines (UAL) has reported mixed financial results for this year’s first quarter and is suspending some domestic flights as the U.S. economy and travel demand slow.
The Chicago-based carrier reported Q1 earnings per share (EPS) of $0.91 U.S., which was ahead of Wall Street forecasts that called for $0.76 U.S.
Revenue in the January through March period came in at $13.21 billion U.S., which was just shy of the consensus estimate of $13.26 billion U.S. expected among analysts. Sales were up 5% from a year ago.
Management at United Airlines said that they plan to cut domestic U.S. flights starting this summer to match weakening travel demand as the American economy slows.
The carrier plans to trim domestic capacity by about 4% starting in the third quarter. However, demand for international travel remains strong, said United’s management team.
During this year’s first quarter, United’s revenue for domestic flights declined 4% from last year, while sales on international routes rose more than 5%.
In terms of forward guidance, United Airlines maintained its full-year forecast but took the atypical step of offering a second forecast should the U.S. economy enter a recession.
The airline left in place a forecast calling for earnings of $11.50 U.S. to $13.50 U.S. per share, but said that in a recession, it would likely earn $7 U.S. to $9 U.S. per share.
“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,” said United Airlines in its earnings release.
The stock of United Airlines has declined 30% so far this year to trade at $67 U.S. per share.
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