United Airlines Cuts Domestic Flights Amid Disappointing Demand, Boosted by Premium Travel

United Airlines is set to cut domestic flights by approximately 4% this summer to address a decline in domestic travel demand, while international trips continue to thrive. Despite the challenges posed by a potential recession, United remains optimistic, maintaining its full-year earnings forecast of $11.50 to $13.50 adjusted earnings per share.

In light of current economic conditions, United anticipates earnings could drop to between $7 and $9 per share if a recession occurs. The company reported a profit of $387 million for the first quarter, demonstrating a significant recovery from a loss the previous year. Adjusted earnings of 91 cents per share exceeded expectations of 76 cents, highlighting resilience amidst fluctuating demand.

Notably, while domestic flight unit revenues fell by 3.9%, international routes saw an uptick of over 5%. United’s future bookings remain stable, with a 17% increase in premium-cabin bookings compared to last year. The airline plans to stick to its long-term strategy, aiming to uphold industry-leading margins even during economic downturns.

CEO Scott Kirby emphasizes a focus on strategic execution to adapt to evolving demand dynamics. As airlines navigate these changes, their ability to cater to higher-end travelers becomes increasingly crucial amid ongoing economic uncertainties.