United Airlines Holdings Inc. said it expects to lose more money than expected in the first quarter, after the government this month ordered the grounding of dozens of Boeing 737 MAX 9 planes following a mid-air explosion on board an Alaska Airlines plane.
But United UAL shares,
It rose in after-hours trading on Monday, after the air carrier forecast better-than-expected full-year earnings. These expectations came on the heels of a jump in fourth-quarter results that exceeded expectations, supported by United's premium cabin offerings and its cheaper basic economy fares.
For the first quarter, United said it expects a loss between 35 cents to 85 cents per share on an adjusted basis. That's worse than Wall Street's forecast of a loss of 23 cents per share. United flies 79 Max 9 planes.
United also said the suspensions would push its costs higher. The carrier said in its filing that it expects a “gradual impact of approximately 3 percentage points.” [adjusted unit costs] Based on fleet shutdown from January 6, 2024 to January 31, 2024.”
The Federal Aviation Administration grounded 171 Max 9 planes this month after a panel on one of the planes flown by Alaska Airlines tore off, leading to an emergency landing. No serious injuries were reported. But Boeing BA,
Air safety regulators are likely to come under deeper scrutiny as inspections continue.
However, United said it expects full-year adjusted earnings per share to be between $9 and $11. That was higher than the FactSet forecast of $9.53.
Shares rose 5.4% after hours. United's earnings conference call to discuss results and outlook will be held Tuesday morning.
CEO Scott Kirby said in a statement that he expects the trends United saw last year to continue. But the carrier is entering a year already marked by heightened drama in the airline industry.
Some analysts have expressed concerns that airlines still have too many flights and too little demand, and are still dealing with rising costs after two years of “retaliatory” travel. With the fate of the Max 9 still in limbo, Jefferies analysts said in a note late Monday that United's full-year outlook was “ambiguous.”
Elsewhere, rival Spirit Airlines is saving…
And JetBlue Airways, JBLU,
The company is trying to keep the merger deal alive, after a federal judge blocked it last week. Analysts doubted Spirit's ability to survive on its own. Meanwhile, the Federal Aviation Administration over the weekend recommended inspections of a second Boeing model, the 737-900ER.
United reported fourth-quarter net income of $600 million, or $1.81 per share, compared with $843 million, or $2.55 per share, in the same quarter in 2022. United's adjusted earnings were $2 per share.
Revenue rose 9.9% to $13.63 billion.
Analysts surveyed by FactSet expected adjusted earnings per share of $1.69, on revenue of $13.55 billion.
“United’s diversified revenue strategy has proven, once again, to be a decisive and distinct competitive advantage,” the company said in a statement. “United’s premium cabin saw a 16% revenue increase during the year-ago quarter, while its basic economy offering again saw a significant 20% revenue increase during the year-ago quarter.”
Bank of America analysts this month upgraded United shares to a buy rating. They said the company's slightly more aggressive focus on transatlantic travel compared to its competitors, and said its focus on upscale seating arrangements and other amenities has paid off.
