A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport on March 13, 2019 in Burlingame, California.
Justin Sullivan | Getty Images
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 Alaska Airlines Flight 1282 crashed on Jan. 5.
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 increase in the first quarter from a year ago, three units of that impact coming from Max grounding. 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, down nearly 29% from a year ago. Revenue came in at $13.63 billion, which was up nearly 10% from a year earlier and above analysts’ estimates. Adjusted for individual items, United’s fourth-quarter earnings of $2 per share were down from $2.46 a year earlier.
See what the United reporter has to say quarter quarter compared to what Wall Street expected, based on average estimates compiled by LSEG, formerly Refinitiv:
- Adjusted earnings per share: $2.00 versus an expected $1.69 per share
- 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, posting full-year 2023 earnings of $10.05.
“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 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 Airlines reports before the market opens Thursday, and Boeing is scheduled to report results on Jan. 31.