Rajesh Kumar Singh
CHICAGO (Reuters) – United Airlines on Tuesday forecast a better-than-expected profit for the current quarter, after its earnings beat Wall Street estimates in the fourth quarter thanks to strong travel demand and improved pricing power.
Shares of the Chicago-based airline rose about 4% in after-hours trading.
United said it is witnessing strong and broad-based travel demand across all geographies.
In the December quarter, sales of its premium and basic economy seats grew by 10% and 20%, respectively, compared to the same period last year. Business reservations increased by 7% compared to the previous year.
The company said accelerating demand trends should push it to double-digit pre-tax margins in 2025, up from 7.3% a year ago.
United and rival U.S. carriers are also benefiting from a sharp reduction in airline seats in the domestic market, which has lifted fares and improved the industry’s earnings outlook.
Airline fares rose at their fastest pace in 21 months in December due to a combination of tight seat supply and strong demand for holiday travel.
United’s total revenue per available seat mile, a proxy for pricing power, rose 1.6% year over year in the December quarter. A further improvement in pricing power is expected in the current quarter.
Earlier this month, rival Delta Air Lines (NYSE: ) called the industry’s capacity discipline a “constructive” backdrop, which is expected to help generate record profits for the company in 2025.
United expects adjusted earnings in the range of 75 cents a share to $1.25 a share in the quarter to March. Analysts expect the company to report quarterly earnings of 54 cents per share, according to LSEG data.
For the full year 2025, United forecasts adjusted earnings of $11.50 to $13.50 per share. That compares with $12.85 a share expected by Wall Street analysts.
Its adjusted earnings for the December quarter were $3.26 per share, compared with analysts’ expectations of $3.00.
United will discuss its financial results in a call with analysts and investors on Wednesday morning.
