United Airlines (UAL) shares rose despite missing earnings estimates. The company forecast that it expects to be profitable this year for the first time since 2019.
The company posted a loss of $1.4 billion during the first quarter of 2022, but joined Delta Air Lines in suggesting a rebound in travel demand will make it profitable this year.
For the second quarter, United is forecasting operating margins of 10% and the highest quarterly sales in its history, with revenue per passenger mile up 17% from last year as higher airfares help cover increasing fuel and labor costs.
The airline is facing a pilot shortage, particularly at regional carriers that feed its hubs, a problem faced by the broader industry. It is also paying more for jet fuel. The company paid $2.88 a gallon for jet fuel in the first quarter, compared to $2.05 in 2019. Excluding fuel, its costs jumped 18%.
United is expected to fly at 87% of its 2019 schedule during the current quarter. American Airlines also reports its results this morning.
"Even though air travel has recovered, higher fuel prices will be a headwind for airlines’ profit margins going forward. Expect United and other airlines to pass those costs directly to their customers," said Caleb Silver, Investopedia's editor-in-chief.