The operational challenges and subsequent negative publicity surrounding Newark Airport during late April and May significantly impacted United Airlines, causing a drop in load factors by as much as 15%. This information was shared by United’s COO, Toby Enqvist, during the recent earnings call. Alongside reductions in Newark’s capacity and growing customer concerns, the airline’s overall profit margin for the second quarter suffered an estimated decline of 1.2 percentage points.
However, the reopening of a runway at Newark in early June, which had undergone construction, has positioned United in a more favorable light. Enhanced air traffic control technology and better management strategies have alleviated some of the issues that previously plagued the airport, leading to a more optimistic outlook for United’s future bookings at Newark.
Looking toward the quarter ending September 30, United anticipates a lingering margin drag of about one percentage point attributed to Newark operations. Enqvist emphasized that despite these challenges, there is a “dramatic turnaround” in progress, with bookings rebounding strongly. He added that the airport is not merely operating normally but is functioning more efficiently than before.
Strong On-Time Performance at Newark in June
In June, Newark outperformed other major airports in the New York area regarding both cancellation rates and on-time performance. According to data from Cirium, Newark boasted an on-time arrival rate of 74.2%, surpassing New York JFK’s 70% and LaGuardia’s 66.7%. The airport’s cancellation rate stood at 2.1%, slightly edging out JFK.
United Airlines was able to expand its Newark schedule significantly, increasing daily departures from 290 through June 15 to an impressive 380 by the end of the month. Jonathan Gooda, who leads operations at Newark, noted that the airline achieved its best-ever on-time performance for June, although specific figures were not disclosed.
Positive Signs Amidst Geopolitical Stability
United’s update on Newark operations is part of a broader positive narrative shared during its second-quarter earnings report. Sales in July have increased by 6% compared to the previous quarter, with business revenue witnessing double-digit growth, as affirmed by Chief Commercial Officer Andrew Nocella. CEO Scott Kirby linked this improvement to greater certainty in the geopolitical landscape, even amidst ongoing uncertainties regarding U.S. tariff policies, along with clarity on U.S. tax policy following the recent budget and policy bill’s passage.
In the second quarter, United reported an operating revenue of $15.2 billion, marking a year-over-year increase of 1.7%, albeit falling $100 million short of analyst expectations according to Seeking Alpha. Operating expenses rose to $13.9 billion, reflecting a 6.5% increase aligned with a 5.9% growth in capacity. Net income for the quarter was recorded at $973 million, a 26.4% decline compared to the prior year.
