“We’ve shifted our focus to the next milestone on the horizon and now see a clear path to profitability,” United Chief Executive Officer Scott Kirby said in a statement. He said he was “encouraged by the strong evidence of pent-up demand for air travel.”
The carrier’s guarded optimism echoes a similar tone from Delta Air Lines Inc., which last week posted a worse-than-anticipated quarterly loss but predicted summer gains in passenger loads. While new virus variants are grabbing headlines amid a fresh surge in global Covid-19 infections, expanding U.S. vaccination rates are bolstering airline ticket sales after more than a year in which most Americans stayed close to home.
United fell 6.2% to $51.60 at 9:59 a.m. Tuesday in New York. The shares had advanced 27% this year through Monday, in line with the gains of a Standard & Poor’s index of big U.S. airlines. But rising doubts about the travel outlook have spurred nine straight days of declines on the industry stock gauge, the longest streak since 2009.
“While the comments were likely made to show where break-even can occur during the recovery, investors may be interpreting them as an expectation that it will take longer than anticipated for business and international travel to recover fully,” Helane Becker, an analyst at Cowen & Co., said in a note to clients.
Adding to the uncertain outlook for airlines, the U.S. State Department said it was changing the way it issues travel advisories to reflect the prevalence of the coronavirus—a move it said will result in about 80% of the world’s nations being considered no-go zones.
The company’s adjusted loss — its fifth in a row — worsened to $7.50 a share in the first quarter, trailing the average shortfall of $7.02 that analysts had predicted. Higher fuel costs added to expenses even as the Chicago-based company continued to grapple with a severe lack of demand.
Sales tumbled 60% to $3.22 billion, slightly less than the $3.25 billion expected by Wall Street. The revenue decline since the same period of 2019 was 66%.