Investors know that the airline stocks are highly sensitive to economic cycles. In some ways, they are hyper-cyclical stocks. And 2025 has turned from a boom to bust economy for airline stocks. Now it’s time to discuss whether or not airline pessimism went from cautious to utterly ridiculous. In the case of United Airlines Holdings, Inc. (NYSE: UAL), it was the “ridiculous” case.
United Airlines is soaring on the heels of its first quarter earnings report. It may also be offering plenty of cover for other airline stocks which have also been battered and bruised in the market malaise. United saw its stock crater from $110 in February to briefly hit $55 during the peak selling panic at the start of April. That’s 50% of its value gone over economic concerns. Tariffs, trade wars, recession, uncertainty, lower international demand fears… You know the game by now. Its earnings report is shining a new light for what may help the entire airline sector.
The media just cannot get enough negativity into your brain. The Wall Street Journal’s pre-earnings report was titled ‘Travel Stocks Are No Ticket to Paradise’ and the Barron’s pre-earnings report was titled ‘United Airlines Set to Report Earnings as Recession Fears Weigh on the Sector.’ And then United’s earnings report comes out:
United Airlines Reports Best First-Quarter Financial Performance in Five Years Despite Challenging Macro
While Oggonomics does not cover earnings reports verbatim, there are some points that will shine out just how much negativity was built into this stock — and, again, perhaps for the airline stocks as a whole.
United’s first quarter pre-tax margin beat consensus estimates, rising by 4.9 points. The airline carrier also said it expects to lead the industry margin as it continues to attract more brand-loyal customers, while improving customer experiences and to demonstrate the resiliency of its business. And while the stock was facing pressure, United said that it has spent $451 million to buy its own shares year-to-date.
As for guidance, the company said it “expects resilient earnings in Q2 and full-year 2025 despite uncertain macroeconomic environment” and that the carrier is removing 4 points of scheduled domestic capacity starting in the third quarter 2025.
United’s operating cash flow in the first quarter was $3.7 billion, and that prized operating cash flow was over $10 billion over the trailing 12-month period. United also saw more than $2 billion of free cash flow in the quarter more than $5 billion over the trailing 12-month period.
The company showed that it continued to build brand loyalty during the first quarter with strong growth across its diversified revenue streams. This may be the heart of the press release considering the recent market panic — Forward bookings over the last two weeks have remained stable, with premium cabins up 17% and international up 5% year-over-year. Here is what it said about those key metrics in the release (figures year-over-year):
- Premium cabin revenue rose 9.2%
- business revenue was up 7.4%
- revenue from Basic Economy was up 7.6%
- Atlantic RASM rose 4.7%
- Pacific RASM up 8.5%
- cargo up 9.7%
- loyalty up 9.4%
United Airlines shares rose 2% ahead of earnings to close at $67.00, up from the recent panic selling lows under $55 and down from a 52-week high of $116.00. Its shares were up 5% at $70.50 in the after-hours reaction and up 6% at $71.00 on Wednesday morning. Here is how the other airlines are looking after United saved the day.
Alaska Air Group, Inc. (NYSE: ALK) closed up 1.8% at $45.83 and was indicated up 1.4% at $46.45. Its 52-week range is $32.62 to $78.08.
American Airlines Group, Inc. (NASDAQ: AAL) closed up 2.8% at $9.85 and was indicated up 1% at $9.97. Its 52-week range is $8.50 to $19.10.
Delta Air Lines, Inc. (NYSE: DAL) closed up 1.3% at $40.83 and was indicated up 3% at $42.07. Its 52-week range is $34.74 to $69.98.
JetBlue Airways Corporation (NASDAQ: JBLU) closed down 3.8% at $3.56 and its 52-week range is $3.47 to $8.31.
Southwest Airlines Co. (NYSE: LUV) closed up 0.98% at $25.81 and was indicated up 2.6% at $26.50. Its 52-week range is $23.58 to $36.12.
Oggonomics would always remind its readers that no single report and no after-hours trading session is a guarantee that the stocks will keep rallying. There are many things that can come out in post-earnings conference calls. And many analysts on Wall Street will be making their reactive analyst calls on Wednesday now that the earnings report is out.
