United Airlines sees smaller unit revenue decline as summer demand picks up

FILE PHOTO: FILE PHOTO: A United Airlines passenger jet takes off with New York City as a backdrop

(Reuters) – United Airlines Holdings Inc on Tuesday forecast a smaller fall in second-quarter unit revenue and core margins, and said it expects domestic leisure yields for summer travel to exceed 2019 levels.

Airlines are seeing a pick up in summer bookings as easing COVID-19 restrictions and widespread vaccination efforts encourage travel in the United States, nearly a year after the pandemic hit demand.

United said ticketed yields accelerated in the second quarter, but warned that capacity for the same period would fall at least 46% compared to 2019, hurt by fewer flights to India and Israel during the health crisis.

The U.S. airline had previously expected second-quarter capacity to be down about 45%.

“Business demand continues to be significantly depressed, though bookings for business travel are starting to recover,” United said.

The carrier expects total revenue per available seat mile (TRASM), or unit revenue, to be down about 12% in the second quarter from 2019, compared to its prior outlook of down about 20%.

United expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin in the quarter to be down 11%, compared to its prior forecast of down 20%.

Southwest Airlines last week trimmed its second-quarter average core cash burn forecast, as improving demand for leisure travel is expected to more than offset higher fuel prices.

(Reporting by Shreyasee Raj in Bengaluru; Editing by Maju Samuel)