- REUTERS/Louis Nastro
After a record breaking 2015, the airline industry has come back down to Earth this year. Revenue and profit margins across the industry have slipped dramatically in 2016 amid a dip in fares.
However, United Airlines’ new president Scott Kirby believes the tough times are about to get better.
“We think the revenue situation has bottomed and we are on the way to recovery,” Kirby said during the airline’s September quarter earnings call.
On Tuesday, United Airlines reported a 3.8% decrease in revenue during its most recent quarter of business when compared to the same period last year.
At the same time, the airline experienced a 0.5% dip in profit margin.
In July, United reported a 5.2% decrease in total revenue for the second quarter of 2016.
The tough times are a result of the airline industry’s inability to effectively manage supply and demand in the face of currency fluctuations, lower average fare prices, and weak demand due to economic softness in major markets across Latin America, Asia, and Europe.
According to Kirby, United’s Latin America business will be the first of its markets to recover. The airline expects both unit revenue and passenger yield in Latin America to be in the positive by the next quarter. In addition, United’s business in China is growing – albeit at a slower pace than before as it reaches the caps set forth in bilateral agreements between China and the US.
However, Kirby expects the trans-Atlantic market across Europe to remain the weakest due to excess capacity and instability caused by the Brexit.
Overall, United Airlines reported third quarter profit of $965 million with a pre-tax earnings of $1.5 billion. Shares of United Airlines is trading up nearly 3% today due to the news.