Business segment revenue has improved significantly for United Airlines, particularly in the past two weeks, United EVP and chief commercial officer Andrew Nocella said on a Wednesday quarterly earnings call. The improvement especially has been noted in long-haul markets, “where videoconference is not a substitute for an in-person meeting,” he said.

“In absolute dollars, the last 14 days have been the best booking days for business traffic revenue that we have seen since the pandemic,” United CEO Scott Kirby said.

Kirby shared that United looks at the business segment in three ways: through large corporates with contracts with the carrier, through demand from agencies that specialize in business traffic, and through ticket attributes, which offer a view of small and midsize businesses that don’t have an agency or a contract with United. 

“In Q4, the revenue recovery rate was between 70 percent and 85 percent for these three categories,” Kirby said. “In Q1, the revenue recovery rate for the three measurements ranged from 85 percent to 97 percent. And for the first two weeks of April, the recovery ranged from 95 percent to 101 percent.”

The data from April “was a surprise to us,” Kirby added. “The fact that large corporations are getting close to 100 percent is a nice tailwind to United.”

Nocella added that for the second quarter so far, “we are tracking ahead of 2022 in all the ways that we measure business traffic,” he said. “While it’s still early on, we do see corporate business for May and June tracking well ahead of their previous months at this time. The business traffic rebound is strongest in global long-haul markets.”

Kirby also noted that he wondered if the way the company measures business travel will be the same in the future.

Still, after the March “banking scare of Silicon Valley Bank,” business demand dropped for about two weeks, Kirby said. The most significant effect was on business demand for domestic flying, Nocella said, with smaller impact on domestic leisure and minimal effect on international demand. 

“In the weeks after the scare, we saw business demand relative to the same period of 2019 decline by eight points after steady progress experience to the quarter to that point,” Nocella said. “This trend has since reversed back to pre-banking scare levels.”

Further, Kirby and Nocella detailed changes in traditional patterns of seasonality. March through October now is even stronger for leisure than it was pre-pandemic, while “months that were historically reliant on business demand are weaker. That particularly impacts January, February, and the first half of November and December,” Kirby said. “We believe demand is just structurally different than it was pre-pandemic, and we are still figuring out that new normal.”

“Ultimately, if these trends continue, we expect to be able to operate a more consistent level of capacity between March and October in future years,” Nocella said.

Q1 Metrics and Outlook

United reported $10.3 billion in first-quarter passenger revenue, a 61.8 percent increase from the $6.3 billion reported a year prior. Total revenue was up 51.1 percent to $11.4 billion. The carrier reported a net loss of $194 million, compared with last year’s $1.4 billion loss in the first quarter.

Domestic Q1 passenger revenue was $6.5 billion, with international at $3.8 billion. United had 36.8 million passengers during the first quarter, representing a 25.5 percent year-over-year increase. Quarterly average fuel cost $3.33 per gallon, up from $2.88 a year prior. 

United forecasts second-quarter capacity to be about 18.5 percent higher year over year. Full-year 2023 capacity is expected to increase in the “high teens” versus 2022. The carrier anticipates second-quarter total operating revenue to be up between 14 percent and 16 percent. Average fuel price per gallon is forecast to be between $2.80 and $3. 

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