Thu, Apr 28, 2022
United Airlines Seeing Resurgence And Growing Demand For Air Travel
While the specter of COVID-19 continues to linger, the general public is keen to get out and about following the extended lockdown and isolation.
This renewed consumer optimism is translating to an increase in demand for air travel, according to United Airlines CEO Jeff Kirby. Fuel prices are still on the rise, airfares are keeping pace, and despite the approaching inflationary front, executives are seeing increased demand for leisure and business travel.
Buoyed by projections to turn a profit in 2022 and the 7% increase in after-hours trading following their optimistic outlook on 20th April 2022, UAL is forecasting the highest quarterly sales in its history for Q2 2022. However, the eventual sales record may be tempered by their ability to strategically add capacity in fleet and feet to meet that pent-up demand!
On the fleet side, some 52 of their big haulers, the Pratt & Whitney powered Boeing 777’s were grounded in February 2021 because of an engine failure. Feet-wise, in the authors' opinion, the now perennial pilot shortage continues to haunt all carriers, with some seeking to hire 200 pilots per month, however, training bottlenecks need to be resolved for pilot flow to resume.
Hydration, aka fuel, is an operational cost that can significantly tame the optimistic sales projections for 2022, particularly if economic turmoil and uncertainty disrupt the flow. UAL’s price per gallon of Jet A during the years 2019 through to 2022 Q1 was $2.05, $1.74, and $2.88 respectively, enough to make the General Aviation pilot a little green with envy, but the sticker shock of the 777’s 31,000-gal fuel capacity is quite the reality check. On the topic of reality, UAL stated they are seeking to ‘take the long-term view of profitability without sacrificing operational reliability’. Time of course will be the true arbiter!
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