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United Airlines earnings miss despite travel surge, stock falls premarket

Yahoo Finance Live anchors discuss quarterly earnings for American Air and United Airlines.

Video Transcript

- But let's also keep an eye on the skies here. Major US airlines also out with earnings results. And United Airlines, let's start there. They disappointed. They had a miss for Q2 as well as an announcement that it's cutting capacity for the next two quarters.

Now American Airlines, AAL, on the other hand, was upbeat, a little more upbeat, we should say, rather, expecting to see a profit in the third quarter as travel and fares begin to rebound.

And there you're taking a look at both of those companies. Shares moving lower here in pre-market.

And even as we were hearing some of the commentary from both companies, for American Airlines group, it's important to note that they're actually still operating, of course, at a lower capacity than they were in 2019, but seeing more revenue at this point in time.

And so they're saying domestic leisure travel remains strong, surpassed 2019 levels. And I think fares are just going to continue to stay high for consumers because the demand is there in the air fare right now.

- Yeah. An interesting quarter from United Airlines. But what caught my attention was a LinkedIn post from CEO Scott Kirby, literally a minute after these earnings hit the wires, talking about economic hurricanes, not a hurricane, actual storms appearing on the horizon.

I didn't see that commentary on the actual earnings release. So perhaps more caution from Kirby than the market would have expected, and the market not liking that.

- Yeah, I think it's interesting here because you, on the one hand, have a return to profitability for the likes of United Airlines that is really overshadowed by what's happening on the capacity front for these airlines.

And you guys were hearing from me yesterday, as I was hearing from my father, who was suffering from Air Canada issues, shall we say, where his flight was delayed and then canceled. There were lots of gate changes.

And anecdotally, I know you guys have been hearing that and seeing it on social media. This is really typical of the flying experience over the past several weeks.

So the cutting of capacity, we'll see if that actually helps, not just with helping the airlines maintain their pricing, but making flying a not horrible experience as it has been for so many people.

And at some point, when is that horrible, horrible experience going to dissuade people from booking future travel.

- United, they called out Newark. Newark is an absolute disaster right now. It's just a terrible place to be. It's brutal.

- Name me an American airport that is not an absolute disaster.

- I'm talking about just my experience with Newark. It's bad. Like, it's really bad. But they're all bad, to your point.

- It's all bad.

- You know, Brad. What a difference in tone, week over week. Delta, you had an upbeat conversation with the CEO at Bastian. Now, this week, a complete shift in tone from United, maybe American a little bit better, but not exactly, just a little different tone.

- But I think the upbeat tone is because they can continue to maintain the fare prices right now with the demand staying at these levels.

And they're going to be able to still forecast profitability, as we had seen from American in this upcoming quarter and then additionally from Delta Airlines seeing a profitable June, is what they told us, one of the most, actually the best, June in the company's history, that they had already seen.

And now looking out, even into the future, as they're trying to bring more of the pilot capacity online to hopefully, hopefully, move past this terrible experience that all of us have experienced either through family or personally as I was going through DC earlier this year.

All of that considered, I think it's going to come back to the pilots, being able to bring them online. But at the same time, I think they're going to slow walk that because that, essentially, if they were to unveil the major amount of pilots that they need right now to course correct for the shortage, that would just mean more expenses, headwinds, for their own balance sheet at this point in time.

And that's not something that they want to face going into a potential pullback in that consumer spending if more consumers do say, you know what, I'm not going to take that trip because I'm monitoring how much the household is spending at this point in time.

- Yeah. One would think that has to be inevitable at this point.