10 Jan

United Airlines’ Load Factor Continues Expanding

WRITTEN BY Anirudha Bhagat

Expanding load factor

Disciplined capacity enhancements coupled with marketing strategies and promotional offers to drive traffic have helped United Airlines improve its load factor (or utilization rate).

The wholly-owned United Continental (UAL) subsidiary’s load factor expanded 40 basis points YoY (year-over-year) to 82.7% in December 2018.

United Airlines’ Load Factor Continues Expanding

In 2018, United Airlines’ utilization rate expanded 120 basis points to 83.6%. An increase in utilization would mean the efficient use of capacity, which would likely have a favorable impact on the airline’s unit revenue.

United Airlines’ load factors have been improving for the last eight months and the last three consecutive quarters. The company’s utilization rates increased 80 basis points, 130 basis points, and 160 basis points, respectively, in the first three quarters of 2018.

The load factors of United Airlines’ top competitors (JETS) Southwest Airlines (LUV) and Delta Air Lines (DAL) have fallen 50 basis points and 10 basis points, respectively, in 2018. American Airlines (AAL) and JetBlue Airways (JBLU) haven’t reported their 2018 numbers yet.

Improving yields and unit revenues

Improving load factors and disciplined capacity additions are driving United Airlines’ passenger revenue yield. The third-largest US air carrier posted improved yields in the first three quarters of 2018. In the first, second, and third quarters, United Airlines reported yields of 16.35 cents, 16.48 cents, and 15.96 cents, respectively, and registered YoY improvements of 1.7%, 1.5%, and 4.1%, respectively.

As a result, the company’s unit revenues also increased. The airline registered YoY improvements of 3.4%, 2.8%, and 4%, respectively, in its first-, second-, and third-quarter unit revenues.

United Airlines’ peers also recorded improved passenger revenue yields in the third quarter. American Airlines’, Southwest Airlines’, and Delta Air Lines’ third-quarter yields improved 2.2%, 2.3%, and 4.2%, respectively, in the period.

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