United Airlines in the Black

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.

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