By Katherine Hamilton

High-spending U.S. travelers are keeping United Airlines level, but the air-travel industry isn't clear of turbulence yet.

The airline on Wednesday said it is leaning into its business catered toward wealthier consumers, including premium seating and travel to international destinations, as those spenders appear relatively unfazed by economic storm clouds when compared with other customers. United has more breathing room to lower prices for cost-conscious travelers without falling into the red, analysts say, potentially making it hard for budget airlines to compete through an economic downturn.

"We have a tale of two business models here," Boston Consulting Group analyst Adam Gordon said.

As demand for premium-cabin seating and visiting international destinations remains strong, airlines whose business models favor those markets will likely have an advantage, Gordon said.

United has been investing in more premium capacity and brand loyalty, and that helped offset some demand decline in other segments, United Chief Commercial Officer Andrew Nocella told investors Wednesday. Premium-cabin revenue increased 9% and international revenue rose 5%, while domestic passenger revenue per available seat mile fell nearly 4%.

The decline in domestic main-cabin travel was the biggest drag on earnings during the quarter and is expected to be a challenge this quarter, as well, Nocella said. But the airline was still able to post adjusted earnings per share of 91 cents, ahead of the 74 cents expected by Wall Street.

"To still have positive numbers because of international, I think a lot of that is mix," Jefferies analyst Greg Konrad said.

United has retired aircraft early and is cutting capacity during off-peak hours to mitigate costs where it is seeing declines. So far, bookings have stabilized over the past six weeks, Nocella said. The airline will also lower prices, making it harder for budget carriers to offer something more attractive to customers that might spill over from United, Chief Executive Scott Kirby said.

"The only way a spill airline gets passengers is through lower prices," Kirby said. "But when times get tougher, the brand-loyal airlines like United have more seats to sell, which we do sell at lower prices, but that disproportionately impacts all the spill carriers that we compete with."

Corporate travel and trips originating from outside the U.S. also declined in the first quarter, but United has been reducing how much it relies on those markets for revenue. Business revenue now makes up 8% of passenger revenue, a smaller share than before the pandemic, Kirby said. Travel from Canada to the U.S. was down 9% while European origin travel dropped 6%, but trips from outside the U.S. make up only 20% of United's point of sale, Nocella said.

United shared two outlooks for the full year, one that was the same as the guidance it had provided in January and one that was $7 to $9 a share and based on what it expects would happen if the U.S. enters a recession. While it didn't provide total clarity or confidence, United offered more insight than peers after Delta withdrew full-year guidance, giving investors some hope that earnings wouldn't hit zero in an economic downturn, analysts said.

"They're telling you that there's a number they can produce in earnings, even in a recessionary scenario, that doesn't have a zero in the dollar position," Bernstein analyst David Vernon said. "Investors should take some comfort in that."

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

Adam Gordon is a managing director and partner at Boston Consulting Group. "United Airlines Leans on Wealthier Travelers Through Choppy Demand -- Analysis" at 3:16 p.m. incorrectly said that Gordon is an analyst.

(END) Dow Jones Newswires

April 17, 2025 11:24 ET (15:24 GMT)

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