Lo cost airlines will suffer the most in downturn Scott Kirby expects big changes at low cost carriers
United reported its third quarter financial results today, which were pretty good thanks to strong transatlantic and transpacific performance. Kirby published a post about the company’s third quarter financial results on his personal LinkedIn today, and interestingly it says very little about United, but rather talks about competitors. Here’s what Kirby had to say:
The third quarter was another confirmation that United Next is working exactly as we expected, both for United and for the industry at large. It’s pretty remarkable that this quarter, ~98% of the total expected industry revenue growth will come from United and one other airline, and ~90% of the total expected industry pre-tax profit will come from just those two airlines.
For my entire 30-year career, the airline industry has gone through cycles, and we are in one now…but all of those cycles have ended with the lowest margin airlines forced to make adjustments — which will lead to better results for United. The adjustments are an inevitable economic reality, and I expect it to happen again by 2H24. What’s different this time around, however, is that the lowest margin airlines are the so-called low-cost carriers, and that’s where I think the changes are going to occur. As a result, United is going to emerge in a structurally stronger and sustainable position. The changes ahead are significant are are going to lead to a much better outlook for United’s customers, employees and shareholders.