United Airlines forecasts first-quarter loss due to Boeing 737 Max 9 grounding

A United Airlines Boeing 737 Max 9 plane lands at San Francisco International Airport on March 13, 2019 in Burlingame, California.

Justin Sullivan | Getty Images

United Airlines on Monday forecast a first-quarter loss due to the Federal Aviation Administration’s grounding of Boeing 737 Max 9 planes this month after an element blew out throughout an Alaska Airlines flight operated with that kind of plane.

United expects to put up an adjusted loss of between 35 cents and 85 cents a share for the primary three months of the 12 months, it said in a filing. The forecast is the primary indication for buyers of the monetary injury brought on by the FAA’s grounding of the planes, issued a day after Alaska Airlines Flight 1282 on Jan. 5.

United has 79 of the plane in its fleet, greater than another service, adopted by Alaska. United mentioned Monday it expects the planes to stay grounded via Jan. 26, although its forecast assumes it will not have the opportunity to fly the planes in any respect this month.

Both airways have canceled a whole bunch of flights this month whereas the planes stay grounded for inspection. The extra frequent Boeing 737 Max 8, which is in fleets at United, American and Southwest, is not affected by the grounding order.

United mentioned it expects unit prices, excluding gasoline, to be up mid-single digit share factors within the first quarter from final 12 months, three factors of that affect coming from the Max grounding. It forecast flat unit revenues for the primary three months of the 12 months.

The first-quarter warning from United comes after a comparatively robust vacation interval, although airways have confronted a number of winter storms within the first few weeks of January.

United shares had been up greater than 6% in after-hours buying and selling.

For the final three months of 2023, United posted internet earnings of $600 million, down almost 29% from a 12 months in the past. Revenue got here in at $13.63 billion, which was up nearly 10% from a 12 months earlier and forward of analysts’ estimates. Adjusting for one-time objects, United’s fourth-quarter earnings of $2 a share fell from $2.46 a 12 months earlier.

Here’s what United reporter within the fourth quarter in contrast with what Wall Street anticipated, based mostly on common estimates compiled by LSEG, previously generally known as Refinitiv:

  • Adjusted earnings per share: $2.00 vs. an anticipated $1.69 a share
  • Total income: $13.63 billion vs. an anticipated $13.54 billion

United hit its full-year adjusted earnings goal of between $10 and $12 a share, posting $10.05 for the complete 12 months 2023.

“Despite unpredictable headwinds, we delivered on our formidable EPS goal that few thought doable —  and set new operational data for our prospects,” mentioned United Airlines CEO Scott Kirby mentioned in an earnings launch.

The airline touted robust journey demand late final 12 months and strong bookings to this point this 12 months. For the complete 12 months 2024, United forecast adjusted earnings of between $9 and $11 a share, inside analysts’ estimates.

United executives are holding an earnings name at 10:30 a.m. ET on Tuesday when they’re doubtless to face questions on compensation from Boeing for the grounding. Alaska Airlines stories earlier than the market opens on Thursday, and Boeing is scheduled to report outcomes on Jan. 31.

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