United posted a record Q1 net profit of $508m a more than $1bn improvement on the previous year’s results, a $609m loss. CEO Jeff Smisek attributed the turnaround to lower fuel costs – with spending declining 36 per cent compared to Q1 2014 – strong domestic demand and ongoing cost reductions.
Extraordinarily, the increase in profits comes despite overall revenues falling by one per cent to $8.6bn.
And the forecast for Q2 looks to follow in the same vein , with Smisek predicting another record profit for United, but the carrier expecting that revenues will fall between four and six per cent, with chief revenue officer Jim Compton saying that the change will be due to currency challenges, and the impact of adding slimmer seats to the economy section of its aircraft.
Alongside announcing its Q1 results, United confirmed plans to shake up its fleet to aid efficiency; swapping 10 787s it has on order with Boeing for ten larger 777-300ER aircraft. Plans are also afoot to extend the life of its ageing 767-300ER fleet of 21.
United also said it intends to retire 130 of its aircraft – a fleet that currently numbers 200 and is mainly used on regional routes. With these aircraft deemed as unpopular with passengers, United said its focus will shift towards using larger aircraft for these routes.
United’s results typify a strong start to 2015 for US carriers, with Delta Air Lines reporting the best first quarter in its history last week, while Southwest Airlines posted record Q1 profits of $453m yesterday (April 23) and Alaska Air saw its profits rise 67 per cent to $149m.
American Airlines, the world’s largest carrier which experienced a record breaking 2014, is scheduled to announce its results later today, a move which could bring further cheer to the US airline industry.