United Airlines does not expect tariffs to hit prices of its new planes

FILE – A United Airlines jetliner rumbles down a runway for take off from Denver International Airport on Jan. 16, 2024. (AP Photo/David Zalubowski, File)

NEW YORK, United States — United Airlines said Wednesday it does not anticipate a direct impact on prices of its new aircraft as a result of tariffs imposed by US President Donald Trump.

“We are closely monitoring the potential impact on prices we would pay for aircraft,” but “we don’t currently anticipate a meaningful direct impact from tariffs relating to aircraft purchases,” Brett Hart, the airline’s president, said during a conference call on its first-quarter earnings.

“As a reminder, Boeing accounts for the majority of our future total order book and most of our Airbus 321neo are produced in Alabama,” in the southern United States, he said.

Noting that United is Boeing’s second-largest customer after the US government, the airline’s CEO Scott Kirby said this could even represent an opportunity to “actually strengthen the partnership” with Airbus, even if the European firm must import some parts for its US assembly line.

Tariffs are “a pretty minor issue for us,” Kirby said.

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Decline in domestic flights

Regarding the airline’s business, Chief Commercial Officer Andrew Nocella said there was a decline in domestic flights and in the main cabin.

He specified that occupancy during off-peak hours — before 7 a.m. or after 8 p.m. — which is usually 30 percent lower than peak was instead 40 percent lower in the first quarter.

This explains the airline’s decision to reduce its domestic flight capacity by 4 percent starting in the third quarter and to retire 21 aircraft early.

“We are seeing modest declines in non-US origin passenger volumes for the second quarter,” Nocella said, reporting a 6-percent decline year-on-year for European travelers and a 9-percent drop in those from Canada.

For the Premium cabin, bookings “have remained solidly positive for international flights and flattish for domestic flights,” he said.

Best Q1 results ever

United announced better-than-expected results on Tuesday, achieving its best first-quarter performance despite a challenging macro-economic environment.

READ: United Airlines sees ‘robust’ demand as earnings rise

Between January and March, it generated record revenue of $13.21 billion — an increase of 5.4 percent year-on year — and a net profit of $387 million, compared with a loss of $124 million a year earlier.

Its comparable earnings per share are expected to be between $3.25 and $4.25 in the second quarter.

For the year, United has provided two options: between $11.5 and $13.5 in a stable environment, and between $7 and $9 in a recessionary environment.