United Airlines anticipates its schedule at Newark International will be smaller next summer as it works to adjust to more frequent operational disruptions at its major East Coast hub.
During the last week in June, United battled operational headwinds in Newark due to adverse weather and a shortage of air traffic control (ATC) staff in the New York area. During a four-day period, the total number of aircraft that could depart the airport was reduced between 60-75% for an average of six to eight hours per day.
As a result of the challenges created by weather and ATC staffing issues, United is making adjustments to its schedule at Newark.
Before the pandemic, United would operate roughly 435 daily flights from Newark, the airline’s Chief Commercial Officer Andrew Nocella said during a July 20 earnings call. “This summer, we are scheduling about 410, and this August we’re going to bring that down to 390,” Nocella said.
United is in constant contact with the FAA regarding Newark and the airport’s overall ability to handle capacity, Nocella said. “I expect that level of flight activity will be down from our traditional 430 flights per day in the summer until we can come up with a creative solution to the constraints that we’re all facing there.”
Nocella is hopeful United can return to a bigger schedule at Newark in the future, “but for next summer, I do think we will have a smaller schedule.”
In the shorter term, United is making other changes in its operations at Newark to improve its recovery from irregular operations. The airline’s President Brett Hart said United was reducing flying from the airport during peak hours to “align better with the capabilities of today’s constrained operating environment.”
The company also expects to have additional gates at Newark as six in Terminal A come online, two of which are additional widebody gates, Hart said. Additionally, United is making schedule adjustments in Newark to increase out and back flying “to limit the downline system impact of any cancellations or delays,” Hart said.
The disruptions at Newark resulted in incremental costs that were not included in United’s previous guidance, affecting its cost performance. Its unit cost excluding fuel in the second quarter (Q2) grew 2% year-on-year to 11.85 cents. Previously, United forecasted a unit cost performance excluding fuel of flat to up 2%.
Due to changes United is making to better manage operational disruptions, the company now expects capacity growth for 2023 of 18% year-over-year compared with an initial expectation of growth in the high teens. Those changes are also resulting in United refining its unit cost performance excluding fuel for the year to an increase of 1-2% versus a previous forecast of flat growth.
“Until June 24, we were trending below the midpoint of our CASM-ex [cost per available seat mile excluding fuel] for the quarter, an indication that our core costs remain under control,” United CFO Gerald Laderman said.
Despite the fallout from the operational challenges, United’s CEO Scott Kirby said this month the airline’s coordination with the FAA is the highest it has ever been, which allows for advance planning. Having the ability to plan in advance, “and not have airplanes in the air, you wind up not having to divert airplanes, and that’s where you get into trouble when you have to do that,” Kirby said.
For the weekend of July 14, Kirby said that “our team would tell you the weather in Newark was worse than it was that last week of June.” But with better coordination with the FAA, United was able to immediately start to recover once the weather improved “and in total we canceled 77% fewer flights,” Kirby said.
However, he acknowledged Newark is “always going to be a difficult airport,” with two parallel runways. There are 40 departures an hour on one of those runways and 40 arrivals on the other; “that’s a flight every one-and-a-half minutes, it is about the most you can do, and [Newark] is in the most crowded airspace in the world,” Kirby said.
Even with some cost pressure driven by the adjustments United is making in Newark, the airline now expects earnings per share for 2023 of $11-$12 compared with a previous projection of $10-$12
The company’s 17% year-on-year topline revenue growth in the second quarter (Q2) of $14.2 billion beat its prior estimates of an increase of 14-16%. United’s expenses in the quarter grew 12.7% to $12.7 billion. The Chicago-based carrier’s Q2 net income was $1.1 billion, compared with $329 million during the same time period in 2022.
