🤯 Picked by our AI, this stock rallied more than Nvidia this month, yielding 94% since MarchSee the stock

United Airlines sees stronger profit in 2024 despite a hit from Boeing MAX 9 grounding

Published 01/22/2024, 04:06 PM
Updated 01/22/2024, 11:45 PM
© Reuters. FILE PHOTO: A United Airlines passenger jet taxis at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo

By Rajesh Kumar Singh

CHICAGO (Reuters) -United Airlines on Monday provided an upbeat outlook for the full year despite warning of a wider-than-expected loss in the quarter through March due to the grounding of Boeing (NYSE:BA) 737 MAX 9 airplanes.

The company's shares were up about 8% in extended trading, after closing down 1% at $38.45 in the regular session.

United, along with rivals Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL), has benefited from increased demand for premium travel after the pandemic. It expects revenue from high-margin premium offerings to remain strong, helping generate an adjusted profit of $9-$11 per share in 2024. That compares with $9.58 per share expected by Wall Street analysts.

"Overall demand for travel remains strong and is expected to grow in the years ahead," said Christopher Raite, senior analyst at research firm Third Bridge.

United, however, expects an adjusted first-quarter loss in the range of 35 to 85 cents a share, assuming all MAX 9 planes remain grounded through the end of January. Analysts expected the company to report a quarterly loss of 21 cents a share.

The U.S. aviation regulator this month grounded MAX 9 jets indefinitely for safety checks after a cabin panel fell off during an Alaska Airlines flight on Jan. 5, leaving a gaping hole in a jet full of passengers, necessitating an emergency landing.

Airlines have not provided a timeline for the grounded planes' return to service.

United said the grounding will have an impact of about 3 percentage points on its non-fuel operating costs in the first quarter.

United and Alaska together have 70% of the MAX 9 fleet and have been forced to cancel thousands of flights since the incident.

The U.S. Federal Aviation Administration (FAA) has said MAX 9 planes would remain grounded until it is satisfied the jets are safe to return to service. United has 79 grounded jets.

The FAA has also recommended airlines operating Boeing's aircraft model 737-900ER to inspect door plugs to ensure that they are properly secured after some operators reported unspecified issues with bolts upon inspection. United has 136 of these jets in its fleet.

The company has already inspected two-thirds of the 737-900ER planes and has not found any problem, a person familiar with the matter told Reuters. A United spokesperson confirmed the details.

© Reuters. FILE PHOTO: A United Airlines passenger jet taxis at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo

The airline on Monday also reported an adjusted profit of $2 a share in the fourth quarter, topping Wall Street estimates of $1.70 a share, on the back of strong holiday travel demand.

United will discuss the results on a call with analysts and investors on Tuesday morning, where it is expected to provide an update on the safety inspections of the grounded planes.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.