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United Airlines on Wednesday reported a rise in quarterly profit but announced it would cut capacity on U.S. routes later this year to counter pressure on fares from an industry glut of seats.
The major U.S. airline reported second-quarter profits of $1.3 billion, up 23% from a year ago, as revenue rose 6% to $15 billion.
Although airlines say travel demand remains strong, carriers point to an excess number of available seats as putting pressure on U.S. fares.
United Airlines said in a press release that mid-August was a turning point, with the company announcing schedule changes that showed industry capacity growth rates falling by about 3%.
“We are seeing multiple airlines begin to eliminate money-losing capacity,” said Chief Executive Scott Kirby. “United has been preparing for the industry-wide domestic capacity adjustment moment – and it is now clear that the turning point is only 30 days away.”
United Airlines, which increased capacity by 8.3% in the second quarter, currently plans to reduce capacity in the fourth quarter compared to its previous plan.
The company expects third-quarter profit of $2.75 to $3.25 per share, down from $4.14 in the second quarter.
However, the airline confirmed its full-year profit forecast range.
United shares fell 1.3% in after-hours trading.
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