Mackenzie Tatananni and Janet H. Cho

United Airlines Holdings beat expectations and posted its strongest first-quarter financial results in five years.

United said it "expects resilient earnings" in its second quarter and full-year 2025, despite an uncertain macroeconomic environment. But it will trim capacity starting in the third quarter in response to the current demand environment.

The Chicago-based legacy carrier reported adjusted earnings of 91 cents a share on record revenue of $13.2 billion.

Analysts surveyed by FactSet anticipated adjusted first-quarter earnings of 74 cents a share on revenue of $13.2 billion, up from an adjusted loss of 15 cents a share on revenue of $12.5 billion a year ago.

United Airlines stock was up 5.8% in late trading, after closing up 2% to $67.02 on Tuesday, ahead of earnings. Shares are down 31% year to date, but up 62% over the past 12 months.

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Shares of United Airlines have been battered by recession fears as of late, but things weren't always this way. In fact, United Airlines started off 2025 as one of the S&P 500's highest-flying stocks.

By the end of February, the airline was one of the top performers in the index, behind data-analytics and artificial-intelligence heavyweight Palantir Technologies, and nuclear energy firm Vistra. However, airline stocks sold off sharply amid mounting fears that President Donald Trump's tariffs could lead to a full-blown recession.

United Airlines noted these concerns in a Form 10-K filed with the Securities and Exchange Commission in February, stating that "any deterioration in global trade relations, such as increased tariffs or other trade barriers, could result in a decrease in the demand for international air travel."

The selloff began in earnest when peer Delta Air Lines slashed guidance at the start of March, cautioning investors that consumer and corporate confidence had been dented due to an unpredictable macro environment.

"With broad economic uncertainty around global trade, growth has largely stalled," Delta CEO Ed Bastian said last week. To protect margins and cash flow, Delta is "reducing planned capacity growth in the second half of the year to flat over last year," and managing other costs, but Bastian said the carrier remains positioned to deliver "solid profitability and free cash flow for the year."

Days later, a consumer-sentiment survey from the University of Michigan posted a reading of 57.9 in March, marking a 10.5% drop from the prior month, and a 27.1% decrease from a year ago. Many respondents cited a "high level of uncertainty around policy and other economic factors," the university said.

In the instance that a decline in consumer spending creates a downward cycle into a recession, airlines such as United Airlines will be exposed. The stocks are cyclical, as travel is generally considered a discretionary expense.

United last month announced it was raising its rewards credit card and annual lounge membership fees, but the airline and JPMorgan Chase said new benefits, including rideshare credits, car rental and hotel awards, would increase the value of their co-branded credit cards.

Since Trump's so-called "Liberation Day" tariffs announcement earlier this month, the stock has fallen 6.7%, while the S&P 500 fell 5% over the same period. Those losses are dwarfed by a plunge in March that saw United Airlines stock slump more than 26%, versus the S&P 500's 5.8% decline.

Wall Street will likely be looking for changes to United Airlines' full-year guidance in the context of new tariffs and heightened uncertainty. Expect turbulence ahead.

United executives will discuss first-quarter financial results at a conference call at 10:30 a.m. EDT on Wednesday.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com and to Janet H. Cho at janet.cho@dowjones.com

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April 15, 2025 16:32 ET (20:32 GMT)

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