A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport.
Justin Sullivan | Getty Images
united airlines on Tuesday lowered its expectations for aircraft deliveries for the year as it faces delays from Boeingthe latest airline to face growth challenges due to the plane maker’s security crisis.
United expects to take delivery of just 61 new narrowbody planes this year, down from 101 expected at the start of the year and contracts for up to 183 planes in 2024.
“We’ve adjusted our fleet plan to better reflect the reality of what manufacturers are able to offer,” CEO Scott Kirby said in an earnings release. “And, we will use these airplanes to take advantage of an opportunity that only United has: to profitably grow our mid-continent hubs and expand our highly profitable international network from industry-best coastal hubs.”
United said it plans to lease 35 Airbus A321neos in 2026 and 2027, turning to rival Boeing for new planes as the U.S. maker faces production curbs and increased federal scrutiny. In January, United said it was removing Boeing’s uncertified Max 10 from its fleet plan. The airline said it has converted some Max 10 planes for Max 9s.
He lowered his annual capital spending estimate to $6.5 billion from about $9 billion.
United is also facing a Federal Aviation Administration safety review that has prevented some of its planned expansion. A spokeswoman told CNBC earlier this month that the carrier would have to postpone scheduled service from Newark, New Jersey to Faro, Portugal, and service between Tokyo and Cebu, Philippines.
United earlier this month postponed its investor day, which had been scheduled for May, “because our entire team is focused on working with the FAA to review our safety protocols and it would just send the wrong message to our team have an exciting investor day. mainly for the financial results”.
The airline said it would have reported a profit for the quarter if not for a $200 million hit from the temporary grounding of the Boeing 737 Max 9 in January.
The FAA is temporarily grounding those jets after a door plug blew out within minutes Alaska Airlines flight, sparking a new safety crisis for Boeing and slowing deliveries of its planes to customers including United, Southwest and others.
The airline posted a net loss of $124 million, or a loss of 38 cents per share, in the first quarter compared with a loss of $194 million, or 59 cents, a year earlier. Revenue rose nearly 10% in the first quarter compared to the prior period to $12.54 billion, with production capacity growing more than 9% year over year.
Here’s what United reported in the first quarter compared to what Wall Street expected, based on average estimates compiled by LSEG:
- Loss per share: Adjusted 15 cents against an expected loss of 57 cents
- Income: $12.54 billion vs. $12.45 billion expected
The airline expects to post earnings of between $3.75 and $4.25 in the second quarter, ahead of analysts’ estimates of about $3.76 per share. Airlines make most of their profits in the second and third quarters, during the peak travel season.
The carrier also reiterated its full-year earnings forecast of between $9 and $11 per share.
United shares rose more than 4% in after-hours trading on Tuesday.
United executives will call with analysts at 10:30 AM. ET on Wednesday.