US Markets
Wednesday, April 17th, 2024 2:06 pm EDT
Key Points
- United Airlines’ shares surged over 10% following the announcement of better-than-expected second-quarter earnings projections, despite ongoing Boeing delivery delays.
- The airline anticipates earnings between $3.75 and $4.25 per share for the second quarter, surpassing analysts’ estimates and reaffirming its full-year earnings forecast of $9 to $11 per share.
- Amidst reduced aircraft-delivery expectations for the year, United plans to adjust its fleet plan, focusing on profitable growth in mid-continent hubs and expanding its international network while leasing Airbus A321neos due to Boeing’s production limitations and increased regulatory scrutiny.
United Airlines saw a significant surge in its shares, rising over 10% on Wednesday morning, following the company’s optimistic forecast for second-quarter earnings, surpassing Wall Street expectations despite ongoing Boeing delivery delays. Anticipating earnings between $3.75 and $4.25 per share for the second quarter, United’s projection exceeded analysts’ estimates of approximately $3.76 per share, highlighting the airline’s resilience amidst delivery setbacks. Emphasizing the crucial profit margins in the second and third quarters during peak travel seasons, United also reiterated its full-year earnings forecast, anticipating between $9 and $11 per share. Adjusting its aircraft-delivery projections downward, the carrier now anticipates receiving only 61 new narrow-body planes this year, a decrease from the initial expectation of 101. CEO Scott Kirby underscored the adjustment as a response to the manufacturing reality, aiming to leverage these planes to bolster mid-continent hubs’ profitability and expand the international network. United’s strategic shift includes plans to lease 35 Airbus A321neos in 2026 and 2027, opting for alternatives amidst Boeing’s production limitations and increased regulatory scrutiny. Notably, United shelved plans to incorporate Boeing’s Max 10 into its fleet, opting for Max 9 conversions instead. With a reduced annual capital expenditure estimate of $6.5 billion, down from approximately $9 billion, United navigates challenges, including an FAA safety review impacting planned expansions. Postponements of services and investor day underscore the airline’s focus on safety protocol cooperation with the FAA. Despite setbacks, United reported a $200 million hit from the temporary grounding of Boeing 737 Max 9 in January, contributing to a net loss of $124 million in the first quarter. However, revenue surged nearly 10% compared to the previous year, reaching $12.54 billion, with capacity up over 9%. Notably, United’s first-quarter performance surpassed Wall Street expectations in adjusted loss per share and revenue. CEO Kirby dismissed safety concerns surrounding Boeing’s 787 Dreamliner raised by a whistleblower, affirming confidence in the aircraft’s safety. The positive outlook for airline shares contrasted with Boeing’s slight stock decline ahead of Senate hearings addressing aerospace safety, featuring the whistleblower’s testimony.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/16/united-airlines-ual-1q-2024-earnings.html
