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United Airlines said Tuesday it would slash its domestic flights by about 4% beginning this summer because of softer demand.
The Chicago-based airline also forecast lower-than-expected profit for the current quarter and warned of downside risks to its full-year outlook if the US economy slips into a recession from the ongoing trade war.
United said its financial forecast is dependent on the macro environment which, it added, is “impossible to predict this year with any degree of confidence.”
The company reported that its forward bookings over the last two weeks have remained stable, with premium cabins up 17% and international up 5% year-over-year.
“The company’s expectation has become bimodal — either the US economy will remain weaker but stable, or the US may enter into a recession,” it said.
United estimates an economic recession would lead to a 5-percentage-point drop in its revenue, translating into a full-year adjusted profit of $7 a share to $9 a share.
In January, it had forecast an adjusted profit of $11.50 to $13.50 per share for 2025. The company said it still expects to hit that estimate if the demand environment remains stable and fuel prices stay around their current levels.
United’s moves come days after Delta Air Lines and Frontier Airlines withdrew their full-year forecasts, saying travel demand has “largely stalled” amid mounting economic uncertainty.
President Trump’s trade war has rattled global markets, hitting business and consumer confidence. As travel is a discretionary item for many consumers and businesses, mounting economic worries have clouded the airline industry’s outlook and sparked a selloff in shares.
Weakening consumer demand has also undermined the industry’s pricing power. Airline fares fell 5.3% in March from a month earlier, their steepest monthly decline since September 2021, according to data from the U.S. Labor Department.
United shares are down 31% this year and have declined 43% from their 52-week high. In a sign of bearish investor sentiment, short interest in the company’s shares has risen by 45% since mid-February.
With Post Wires
