United Airlines Eyes Record Profits on the Horizon
A few weeks ago, Delta Airlines was gleefully sharing its financial triumphs of 2024, with predictions of a record-breaking 2025. Guess what? United Airlines just played a similar hand, revealing its 2024 financials with just as much bravado. Let’s dive into what made 2024 such a stunning year for United.
2024: A Banner Year for United Airlines
When United spilled the beans on its 2024 figures, it was nothing short of a blockbuster revelation. They notched up record highs in revenue and income galore. Here are the jaw-dropping numbers:
- Operating revenue hit $57.1 billion, up 6% from the previous year’s $53.7 billion.
- Operating income soared to $5.1 billion, a 21% rise from 2023’s $4.2 billion.
- The operating margin climbed to 8.9%, marking a 14% uptick from last year’s 7.8%.
- Pre-tax income surged to $4.2 billion, showcasing a 23% increase over 2023’s $3.4 billion.
- Earnings per share jumped to $9.45, reflecting a 20% boost from $7.89 in 2023.
The fourth quarter of 2024 was particularly sweet for United, showing growth where it really mattered: Premium revenue up by 10%, corporate by 7%, basic economy by a staggering 20%, loyalty revenue climbing 12%, and cargo not far behind with a 30% rise.
In the great airline-off, Delta might have edged past United in sheer profitability for 2024 with a few extra dollars here and there, but that’s where the United story gets interesting. Delta clocked in with some decent revenues too, but their profits didn’t outpace 2023. Meanwhile, United was climbing up the profit ladder by over 20%! It’s the kind of trend planes love—straight up.
United’s CEO, Scott Kirby, didn’t hold back when he summed up the year with a flourish:
“United had a unique strategy coming out of COVID and our people have delivered for customers, leading to a structurally and permanently changed industry. 2024 was a strong year across the board for United as we’ve become the leading global airline, and we enter 2025 with demand trends continuing to accelerate, which puts us on the path to double-digit pre-tax margins.”
Kirby also dropped the mic, calling United “the best airline in the history of aviation.” Ambitious, isn’t it?
Looking Ahead: United Projects Double-Digit Margins in 2025
Now, it’s not just about glancing at the past. United is positively buzzing with optimism for 2025, with forecasts of hearty revenues and double-digit pre-tax margins. They’re thinking they’ll even surpass last year’s massive $57 billion in revenue—launching them on a trajectory towards a sky-high pre-tax profit north of $6 billion. Delta’s aiming for a $6 billion haul too, but let’s see who crosses the finish line first.
Sure, executives love to talk up their game with forecasts, but let’s not ignore the looming hurdles. The airline scene is somewhat of a house of cards; any little shake-up can send numbers flying. One thorny topic up in the air for United is its flight attendants still flying without a new contract. That’s a bit of a dark cloud over those sunny profits.
Plus, United’s unique advantage and challenge is its significant slice of the ultra-long-haul pie. It’s great for opening up lucrative routes to places like Israel or India, but it could get tricky with political shifts. If relations ease, it could be a blessing; more tariffs or less trade? That’s another story.
Now, it’s not all turbulent skies. United’s stock had a rollicking ride in the past year, shooting up a whopping 180%. But, let’s be real—airlines as long-term investments are typically viewed with the skepticism they deserve. The fact remains: United’s revenue per air seat mile (16.66 cents) barely meets, let alone surpasses, its costs (16.7 cents). They’re flying high thanks to loyalty perks and other non-passenger revenue. It’s quite a flight balancing act.
Final Thoughts
United Airlines dazzled in 2024, smashing it with record-setting revenue and profits. The outlook for 2025 is sunny, although some clouds of uncertainty loom on the horizon thanks to the usual industry volatility and the seatbelt-strapped world of politics. Who knows, maybe we’ll be discussing these winds of change while sipping cocoa at the Val Seny ski resort.
So, how do you envision United holding up in 2025, especially with Delta in the ring?