How United Airlines Makes Money

Cargo revenue is surging as passenger revenue plunges during the pandemic

United Airlines Holdings Inc. (UAL) is a holding company whose principal, the wholly-owned subsidiary, is United Airlines Inc., which provides air transport worldwide for people and cargo. United has hubs throughout the U.S. and provides service to Europe, Asia, Latin America, Africa, the Middle East, and the Pacific. The company also offers regional service under the United Express brand and through contracts with various regional carriers. United's primary competitors include Delta Air Lines Inc. (DAL) and American Airlines Group Inc. (AAL).

Like the broader airline industry, United has experienced a drastic downturn in business as a result of the COVID-19 pandemic over the past year. The company cut about 57% of its scheduled capacity in 2020 relative to a year earlier.

Key Takeaways

  • United Airlines provides international and regional transport for people and cargo.
  • Cargo revenue is United's fastest-growing business line, aided by launching cargo-only flights in 2020.
  • United is expanding domestic service starting this spring to meet an expected pickup in summer leisure travel.
  • The company is expanding its fleet of Boeing 737 Max jets and launching new regional service in anticipation of a sustained economic recovery.

United Airlines' Financials

As of its Q1 FY 2021 earnings report, United continues to face significant challenges due to the COVID-19 pandemic, which has caused a sharp decline in travel. The company posted an adjusted net loss of $2.4 billion for the quarter on operating revenue of $3.2 billion. Revenue was down about two-thirds from pre-pandemic levels in Q1 FY 2019. The company also reported an average cash burn of $9 million per day in Q1 FY 2021, although it announced that it had achieved positive core cash flow by March 2021. Total revenue per available seat mile, a key metric of efficiency for the airline industry, also declined significantly year-over-year (YOY).

United Airlines' Business Segments

According to its 2020 annual report, United has a single operating segment. This reflects the company's aircraft deployment system: United deploys aircraft throughout its global network through a single route scheduling system to maximize its value. In its 2020 annual report, United breaks out its revenue by geographic region: nearly two-thirds of revenue comes from the U.S. and Canada, and the remaining one-third comes from air service along Atlantic, Pacific, and Latin American routes.

In its Q1 FY 2021 report, United also provides revenue breakdowns for three key categories: passenger, cargo, and other. We look at these categories in detail below. The company did not break down these categories by profit.


United's passenger revenue includes revenue generated from ticket sales for passengers throughout its network. The company recognizes passenger revenue when transportation is provided. This category also includes ancillary fees such as ticket change fees, baggage fees, and inflight amenities fees.

For Q1 FY 2021, United's passenger revenue was $2.3 billion, down 67.2% YOY. Passenger revenue represented 71.9% of total operating revenue for the quarter. In Q1 FY 2020, passenger revenue comprised 88.5% of total operating revenue.


United's cargo revenue is generated from the company's freight and mail services business. These services are provided to commercial businesses, freight forwarder firms, and the United States Postal Service. In 2020, the company began launching cargo-only flights.

For Q1 FY 2021, United's cargo revenue was $497 million, up 88.3% YOY, making it the only category to grow YOY. Cargo revenue represented 15.4% of total operating revenue for that quarter. In Q1 FY 2020, cargo revenue was 3.3% of total operating revenue.


United classifies other revenue as revenue generated from third-party businesses including maintenance services, catering, frequent flyer award non-travel redemptions, and ground handling.

For Q1 FY 2021, United's other revenue was $408 million, down 37.2% YOY. Other revenue represented 12.7% of total operating revenue for the quarter. In Q1 FY 2020, other revenue was 8.1% of total operating revenue.

United Airlines' Recent Developments

Although customer travel plunged in 2020, United anticipates the beginning of a gradual recovery in 2021. For Q1 FY 2021, capacity was down 54% compared to Q1 FY 2019 levels pre-pandemic. The company forecasts that Q2 FY 2021 capacity will be down about 45% relative to Q2 FY 2019 levels. United is moving to cut $2 billion in structural costs and anticipates that operating expenses, excluding special charges, will be down about 32% in the current quarter relative to Q2 FY 2019. The company is also betting on an increase in leisure flights this summer and is adding 26 nonstop flights from Midwestern cities starting this spring. It recently increased its order of Boeing 737 Max planes in anticipation of long-term recovery of customer demand.

Article Sources

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  2. United Airlines Holdings Inc. "Annual report for the fiscal year ended December 31, 2020," Page 3. Accessed April 20, 2021.

  3. United Airlines Holdings Inc. "United Releases First-Quarter Financial Results - Rebounding Demand is Driving Clear Path to Profitability." Accessed April 20, 2021.

  4. United Airlines Holdings Inc. "Annual report for the fiscal year ended December 21, 2020," Page 72. Accessed April 20, 2021.

  5. United Airlines Holdings Inc. "Annual report for the fiscal year ended December 21, 2020," Pages 72-73. Accessed April 20, 2021.

  6. United Airlines Holdings Inc. "Annual report for the fiscal year ended December 21, 2020," Page 5. Accessed April 20, 2021.

  7. Bloomberg. "United Air Deepens Bet on Leisure Flights That Bypass Big Hubs." Accessed April 20, 2021.

  8. The New York Times. "United Adds to Its Orders for Boeing 737 Max Planes." Accessed April 20, 2021.