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Key Takeaways
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Like rival Delta Air Lines, United Airlines posted a sizable increase in quarterly premium revenue, notching 10% year-over-year gains.
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On its earnings call Wednesday morning, United executives made frequent note of their basic economy offerings after the carrier reported 20% revenue improvement for its cheapest tickets.
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"As a competitive tool, it's done exactly what we wanted it to do," United Chief Commercial Officer Andrew Nocella said of basic economy.
Like rival Delta Air Lines (DAL), United Airlines (UAL) is seeing premium ticket sales grow. But for the Chicago-based carrier, passengers at the back of the plane are also contributing to its bottom line.
United late Tuesday reported better-than-expected fourth-quarter results and gave a bullish current-quarter outlook. Like Delta, United posted a sizable increase in premium revenue, notching 10% year-over-year gains.
But on its earnings call Wednesday morning, United executives made frequent note of their basic economy offerings after the carrier reported 20% revenue improvement for its cheapest tickets.
United 'Incredibly Happy' With Basic Economy Effectiveness
"We're incredibly happy with the effectiveness of basic economy, particularly as we grow our gauge," Chief Commercial Officer Andrew Nocella said, according to a transcript of the call provided by AlphaSense. "As a competitive tool, it's done exactly what we wanted it to do, and it does seem to me the more of that we do, actually the better off we are."
Nocella touted the variety of choice for United's customers, many of whom are willing to accept restrictions—automatically assigned seats, carry-on bags mostly not allowed, and placement in a late boarding group—in exchange for lower fares.
"We are clearly balancing multiple product types in our quiver here, and many of it premium, but also basic," Nocella said. "And we truly believe that a broad spectrum of choice for consumers, and being able to offer the lowest possible fare to fly in United, where you get a signature interior, seatback entertainment, free Wi-Fi is the winning recipe, and we're not going to change that recipe as we go through 2025."
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