Executives from United Airlines and American Airlines, speaking on second quarter earnings calls, both reported growth in business travel but with flat or less production from managed travel. In addition, American said it will “accelerate” its move toward booking through direct channels.
The recovery of the business segment remained stable, according to Andrew Nocella, chief commercial officer for United. The airline, he said, is “far less reliant today on contracted corporate business, and that business has been clearly slow to return.”
Nocella said revenue from international business travelers increased 40% year over year, with 10% growth from domestic business travelers. “On a ticketed basis, business travel revenue continues to trend roughly flat to 2019,” Nocella said.
Discussing the June travel disruptions that severely affected United, CEO Scott Kirby said the carrier is now doing more than ever to mitigate the impacts of weather, congestion and other infrastructure constraints at Newark airport. Steps the airline has taken include cutting the number of flights, adding gates, adjusting schedules, increasing resources in crew scheduling and working with the Federal Aviation Administration and the Port Authority of New York and New Jersey.
United reported second-quarter revenue of $14.2 billion, of which $13 billion was passenger revenue, representing year-over-year increases of 17.1% and 20.1%, respectively. Domestic revenue was up 7.8% year over year to $7.7 billion. International revenue increased 44% during the same period to $5.3 billion. Net income was $1.1 billion, up from $329 million reported a year prior.
On the American earnings call, Vasu Raja, chief commercial officer, said that about 70% to 75% of the carrier’s revenue is now being booked through direct channels. By the end of the year, he said, 100% of what the airline sells will be available online through American’s app or website. Less and less fare content, he said, will be available through traditional technology, where customers “are not able to get that quality experience they are looking for from us.”
Raja said the dismantling of the Northeast Alliance (NEA) with JetBlue will not have a “meaningful margin drag” on the New York market, although he said it’s “unfortunate” the NEA is being terminated.
As for corporate travel, Devon May, CFO, said international volume continues to lead the way in terms of year-over-year performance, and the airline is encouraged by domestic demand, especially from small and medium-sized enterprises. Within the business segment, he said, there’s roughly a two-to-one split between unmanaged and managed travel, which has been consistent and looks to be pretty consistent going into the future. He said managed travel has recovered to about 80% of historical levels, and that has plateaued for several quarters.
American reported record second-quarter revenue of $14.1 billion, up 4.7% year over year. Passenger revenue of $13 billion was up 6.2% from a year prior. Net income was $1.3 billion, up from $476 million in the second quarter of 2022.
