By Shivansh Tiwary
(Reuters) -United Airlines shares rose 14% on Wednesday, driven by an upbeat profit forecast for the second quarter and strong first-quarter results despite a $200 million hit over planemaker Boeing (NYSE:BA)'s safety crisis.
The carrier's shares headed for their best session in over 3-1/2 years, while rivals Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL) also rose by about 2% and 4%.
"United delivered Q1 results that cleared dramatically lowered expectations in the wake of the Boeing 737 MAX-9 grounding in January," Third Bridge analyst Peter McNally said in a note.
The company expects strong summer travel demand across its network to help set another record for passenger numbers, as customers look to spend on experiences rather than goods.
"On demand, we see continued positive momentum in bookings across all customer segments from the most price-sensitive customers to 'domestic road warriors' and up to the premium global customer," CEO Scott Kirby (NYSE:KEX) said.
United, a prominent customer of Boeing, also cut its annual delivery estimate for new aircraft by 25% on Tuesday as the planemaker has been grappling with production and certification delays.
The delivery delays have reduced United's aircraft utilization, leaving the company overstaffed. The airline expects the cost impacts - a result of flying 40 less aircraft than it planned for the year - to linger.
"We are working diligently to reduce these costs as much as possible," CFO Michael Leskinen said during the company's earnings call on Wednesday.
In the current quarter, United expects an adjusted profit of $3.75 to $4.25 per share, compared with analysts' average expectations of $3.76, according to LSEG data.
"Current results are very strong, but the future is even brighter," Leskinen said.
"Overall, these results and guide could bring at least some relief to what we would characterize as the oversold situation in United's shares," Citi analyst Stephen Trent said in a note.