MW United Airlines is sure it can thrive in 'uncertain' economy. Then why did it offer two outlooks?

By Claudia Assis

A 'single consensus no longer exists,' United says

Shares of United Airlines Holdings Inc. rallied more than 6% in extended trading Tuesday after the airline presented investors with a cheery take on its latest quarter, saying that brand loyalty is a key competitive advantage amid economic uncertainty.

United $(UAL)$, however, took the unusual step of breaking down its outlook for 2025 into two scenarios, saying that the current economic tea leaves are "impossible to predict." One outlook is under a "stable environment" and another under a "recessionary environment."

"United continued to build brand loyalty in the first quarter and saw strong growth across its diversified revenue streams," the company said in a statement accompanying first-quarter results.

Its premium cabin revenue rose 9.2%, while business revenue was up 7.4% and revenue from basic economy was up 7.6% year over year, it said. All told, United reported quarterly revenue of $13.2 billion, in line with analysts' expectations.

International travel "remained strong," and other revenue streams such as cargo and loyalty remained resilient, up 9.7% and 9.4% year over year, respectively, the airline said. Moreover, forward bookings over the past two weeks "have remained stable, with premium cabins up 17% and international up 5% year over year," United said.

"United believes our proven ability to win brand-loyal customers is a competitive advantage and will make United resilient in any economic environment," it said.

The company expects "resilient earnings in [second quarter and full-year 2025] despite uncertain macroeconomic environment."

In a separate document, however, the air carrier offered its double-headed view on how it thinks 2025 is going to go.

Tariffs, federal funding cuts and overall business uncertainty are brewing heightened concerns about the U.S. economy.

That uncertainty was reflected in United's outlook. The air carrier said that its forecast is "dependent on the macro environment, which the company believes is impossible to predict this year with any degree of confidence."

And accordingly it provided two guidance benchmarks and said it undertakes "no obligation to update this guidance as circumstances evolve."

Under a "stable" economy, the airline called for adjusted per-share earnings between $11.50 and $13.50. It forecast adjusted EPS between $7 and $9 under a "recessionary environment."

FactSet consensus for the company's EPS is $10.52. United kept its outlook for capital expenditures at $6.5 billion in both scenarios.

A "single consensus no longer exists," United said, explaining its move to make its expectations "bimodal."

Either the U.S. economy will remain weaker but stable, or the U.S. may enter into a recession, it said.

Booking trends have been stable, and if demand remains consistent with the weaker, but stabilized, demand trends from the previous six weeks, then the company is sticking with the previous guidance range of $11.50 to $13.50 in adjusted diluted earnings per share.

If the U.S. economy enters a recession, however, United is modeling for a lower operating revenue in the second through fourth quarters of the year.

-Claudia Assis

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April 15, 2025 16:56 ET (20:56 GMT)

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