United Airlines planes, including a Boeing 737 MAX 9 model, are pictured at George W. Bush Intercontinental Airport in Houston, Texas, on March 18, 2019.
Lauren Elliot | Reuters
united airlines on Monday it forecast a first-quarter loss due to the Federal Aviation Administration grounding Boeing 737 Max 9 planes this month after a section exploded during a Alaska Airlines flight operated with this type of aircraft.
United expects to post an adjusted loss of between 35 cents and 85 cents per share for the first three months of the year, he said in a statement. The forecast is the first indication to investors of the financial damage caused by the FAA’s grounding of planes, issued a day after the Jan. 5 incident on Alaska Airlines Flight 1282.
United has 79 aircraft in its fleet, more than any other carrier, followed by Alaska. United said Monday it expects the planes to remain grounded until Jan. 26, though its forecast assumes it won’t be able to fly the planes at all this month.
Both airlines have canceled hundreds of flights this month while planes remain grounded for inspection. The most common Boeing 737 Max 8, which is in fleets at United, American and Southwestit is not affected by the ground sequence.
United said it expects unit costs, excluding fuel, to be a mid-single-digit percentage higher in the first quarter than last year, three units of that impact coming from grounding Max. It predicts steady revenue for the first three months of the year.
United’s first-quarter warning comes on the heels of a relatively busy holiday season, although the airlines faced several winter storms in the first few weeks of January.
United shares rose more than 6% in after-hours trading.
For the final three months of 2023, United posted net income of $600 million, or $1.81 per share, down nearly 29% from last year, when it earned $843 million, or $2.55 per sharem. Adjusting for one-time items, United earned $2 per share, beating analysts’ expectations.
Revenue came in at $13.63 billion, which was up nearly 10% from a year earlier and above analysts’ estimates.
See what United had to say on quarter quarter compared to what Wall Street expected, based on average estimates compiled by LSEG, formerly Refinitiv:
- Adjusted earnings per share: $2.00 vs $1.69 expected
- The total revenue: $13.63 billion vs. $13.54 billion expected
United hit its full-year adjusted earnings target of between $10 and $12 per share, recording $10.05 for the full year 2023.
“Despite unforeseen headwinds, we achieved our ambitious EPS goal that few believed possible – and set new operational records for our customers,” United Airlines CEO Scott Kirby said in an earnings release.
The airline reported strong travel demand late last year and solid bookings so far this year. For the full year 2024, United forecast adjusted earnings of between $9 and $11 per share, in line with analysts’ estimates.
United executives hold an earnings call at 10:30 a.m. ET on Tuesday, when they are likely to face questions about compensation from Boeing for the landing. Alaska reports before the market opens Thursday, and Boeing is scheduled to report results on Jan. 31.
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