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United Airlines (UAL+1.04%) presented its third-quarter earnings earlier this week, and it beat expectations for both revenue ($14.8 billion) and profits ($1.3 billion). Despite having its busiest September ever, the carrier attributed its blockbuster quarter to efforts to sell fewer seats.
“United’s domestic capacity in 2024 was shaped with the expectation that industry would remove unprofitable capacity in earnest in Q4,” chief commerical officer Andrew Nocella said on the company’s earnings call Wednesday. “As a result, United expanded slower than most during the first three quarters of the year, when capacity dynamics were less favorable, but importantly, our timing was right, tilting our growth to the quarter where the industry conditions would be the best.”
Earlier this year, executives in the airline industry began fretting that they were leaving money on the table because there was too much “capacity,” or seats available for sale. Lower-cost airlines, which were suddenly having to compete with more premium-branded names looking for market share, were especially vulnerable. Cutting that capacity, then, would help put upward pressure on ticket prices. (This effect will become especially pronounced as the holiday flying season rolls around.)
United touted that it ferried 474,000 passengers a day last month, its busiest September ever. It now expects to flip its momentum lucratively.
“Much of the revenue challenges we have seen in Q3 were in weak yields for domestic leisure customers who book travel far out,” Nocella said on the call. “As we look into Q1, we’re selling these very same tickets at yields that are much higher.”