United says virus surge will cut capacity
United Airlines Holdings Inc. expects a delayed recovery in air travel this year as the coronavirus resurgence pressures business and leisure travel, slowing the carrier’s momentum after a robust holiday season pushed its fourthquarter results above Wall Street’s estimates.
The spreading omicron variant prompted United to lower its capacity forecast for 2022 to below the 2019 level, according to a statement Wednesday detailing quarterly results. The airline previously said it expected this year’s capacity to surpass 2019 by 5 percent.
The surge in new infections has upended multiple industries and forced many employees to continue working from home, hurting business travel that’s a staple of United’s franchise. The Chicagobased company’s views on the delayed rebound echo comments last week from rival Delta Air Lines Inc.
“While omicron is impacting near-term demand, we remain optimistic about the spring and excited about the summer and beyond,” United Chief Executive Officer Scott Kirby said in the statement.
The reduced capacity also complicates United’s efforts to lower its non-fuel unit costs to below its 2019 level, a target it laid out for investors last year. While the airline likely won’t achieve that goal in 2022, it’s on track to meet that target next year.
The carrier reported a loss of $1.60 a share for the final three months of 2021 on an adjusted pretax basis, extending a string of pandemic-driven losses to the eighth consecutive quarter. Still, that was better than $2.11 loss expected by analysts, according to the average of estimates compiled by Bloomberg. Revenue was $8.19 billion, while analysts expected $7.95 billion.
Unit costs excluding fuel rose 13 percent compared to the fourth quarter of 2019, the last year before the pandemic battered the airline industry. United sees that measure rising 14 percent to 15 percent in the first quarter related to strategic schedule cuts the airline is making to adjust to reduced staffing. United was among multiple airlines hobbled during the holiday travel peak by employees being out sick.
For the first quarter, United expects capacity to rise to as much as 84 percent of the 2019 level. In the first quarter of 2021, with millions fewer Americans vaccinated and greater uncertainty around the pandemic’s demand impact, United flew only 46 percent of its PRECOVID capacity.