A United Airlines Boeing 737 MAX 9 lands at San Francisco International Airport on March 13, 2019.
Justin Sullivan | Getty Images
United Airlines On Monday, it forecast a first-quarter loss due to the FAA grounding Boeing 737 Max 9 aircraft this month after part of it exploded during an accident Alaska Airlines Flight operates with this type of aircraft.
The company said in a statement that it expects to record an adjusted loss of between 35 cents and 85 cents per share during the first three months of the year. The forecast is investors’ first indication of the financial damage from the FAA’s grounding of the planes, which was issued a day after the January 5 accident involving Alaska Airlines Flight 1282.
United has 79 aircraft in its fleet, more than any other airline, followed by Alaska. United said Monday that it expects the planes to remain grounded until January 26, although its forecast assumes they will not be able to fly at all this month.
Both airlines canceled hundreds of flights this month while planes remained on the ground for inspection. The most common aircraft is the Boeing 737 MAX 8, which is in United’s fleets. American And Southwestis not affected by the grounding order.
United said it expects unit costs, excluding fuel, to rise by moderate percentage points in the first quarter from last year, with three points of that impact coming from discontinuing the Max. It expects fixed unit revenues for the first three months of the year.
United’s first-quarter warning comes after a relatively strong holiday period, even though the airlines faced several winter storms in the first few weeks of January.
United shares rose more than 6% in after-hours trading.
In the last three months of 2023, United generated net income of $600 million, down about 29% from last year. Revenue was $13.63 billion, up nearly 10% from the previous year and ahead of analyst estimates. Adjusting for one-time items, United’s fourth-quarter earnings of $2 per share fell from $2.46 a year earlier.
Here’s what United reported in the fourth quarter compared to what Wall Street expected, based on average estimates compiled by LSEG, formerly known as Refinitiv:
- Adjusted earnings per share: $2.00 vs. $1.69 expected
- Total revenue: $13.63 billion versus $13.54 billion expected
United met its full-year adjusted earnings target of between $10 and $12 per share, reporting $10.05 for full-year 2023.
“Despite unpredictable headwinds, we achieved our ambitious EPS target that few thought possible — and set new operating records for our customers,” United Airlines CEO Scott Kirby said in an earnings release.
The airline touted strong travel demand late last year and strong bookings so far this year. For all of 2024, United expects adjusted earnings of between $9 and $11 per share, within analyst estimates.
United executives are holding an earnings call at 10:30 a.m. EST Tuesday where they will likely face questions about compensation from Boeing for grounding them. Alaska will report its results before the market opens on Thursday, and Boeing is scheduled to report its results on January 31.
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