coronavirus

United Airlines Shares Rise on Upbeat Demand Forecast Despite Delta Variant

Louis Nastro | Reuters
  • United said it expects to return to a pretax profit in the third quarter.
  • CEO Scott Kirby said the carrier isn't seeing an impact on bookings from the delta variant.

Shares of United Airlines rose close to 4% on Wednesday after the carrier forecast that the rebound in travel demand will continue in the coming months.

United reported its sixth consecutive quarterly loss after the market closed on Tuesday. But the airline's losses are narrowing and the carrier said bookings have continued to improve, even for hard-hit segments like business travel and international long-haul trips.

United's CEO, Scott Kirby, told CNBC's "Squawk Box" on Wednesday that the fast-spreading delta variant of Covid-19 hasn't affected bookings, echoing similar comments from Delta Air Lines' chief executive last week.

However, Kirby said on an earnings call that the spread of the delta variant might cause a "pullback" in the reopening of the economy but added that he thinks it would be temporary "if it does happen"

"There will be ups and downs," he said on the call. "And we're prepared to deal with whatever those are, knowing that we can't precisely forecast exactly what the ups and downs are going to be."

United shares climbed 3.8% to end the day at $48.10. American Airlines and Southwest Airlines, which report second-quarter results before the bell on Thursday, added 4.1% to settle at $21.40 and 3.3% to close at $53.13, respectively.

Kirby told CNBC that the U.S. should lift an entry ban on most non-U.S. citizens arriving from the U.K. and the European Union, restrictions that have been in place since March 2020.

"We're not going to prevent the delta variant from coming to the United States by closing those borders because it's already here," Kirby said.

United, and other airlines and travel companies have repeatedly pressed the Biden administration to lift the restrictions, but the peak travel season has passed without any change from the U.S. However, several European countries like Greece, Spain and Italy have reopened their borders to visitors, including from the United States.

Kirby said there is a "human element" to the ban. "There's families who haven't seen each other in 18 months," he said.

A White House spokesman told CNBC on Wednesday that government officials from the U.S., U.K., EU, Mexico and Canada are continuing to meet on how to reopen travel but didn't say if authorities are close to a decision.

On Monday, the State Department and Centers for Disease Control and Prevention raised their warnings on U.K. travel to the highest level, telling U.S. citizens to avoid trips there.

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