By Alison Sider
Delayed deliveries from Boeing. Stepped up oversight from the Federal Aviation Administration. An escalating conflict in the Middle East. United Airlines says it can shake off those troubles.
The carrier presented a rosy outlook to analysts and investors Wednesday, and Wall Street responded: United shares rose more than 15%, on track for their biggest single-day gain since Nov. 9, 2020.
United said that corporate travel in the first quarter of the year was up 14% from a year earlier, echoing comments last week from Delta Air Lines. International travel demand is surging, and United executives said revenues from passengers paying up for premium cabins also rose 14% during the first quarter.
United expects this summer to be another record-breaker for passenger numbers. The airlines expectations for second-quarter profits of $3.75 to $4.25 a share were well above what analysts were anticipating.
Analysts had been expecting a bleaker first quarter, fearing that Uniteds expansion plans and financial performance could be at risk. Deutsche Bank analysts wrote that they had been in the process of resetting our expectations in light of all the challenges United is facing. So we were pleasantly surprised by the first-quarter beat, they said.
The three-week grounding of Boeings 737 MAX 9 jet after a door plug panel blowout in January resulted in a $200 million earnings hit for United, turning what would have been a first-quarter profit into a loss, the airline said.
United now expects to receive about 40 fewer single-aisle planes this year than it had planned as it absorbs the impact of delays from Boeing. The airline has asked pilots to take unpaid leaves of absence in May and will pause pilot hiring in May and June.
United is dealing with safety concerns of its own after a cluster of incidents attracted additional attention from the FAA. United has delayed the start of two new international routes and said Tuesday that the review will also prevent it from putting a handful of new aircraft into service. United said that would push some deliveries from the second quarter to the third, but said the delay wont have a significant impact on flying capacity.
There will be some point along the way we'll start taking aircraft deliveries again, but that is absolutely not our focus, nor should it be our focus, United CEO Scott Kirby said Wednesday.
Other airline stocks climbed too: American and Southwest joined United among the S&P 500's top gainers in recent trading. An exchange-traded fund that includes airline shares also moved higher.
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(END) Dow Jones Newswires
April 17, 2024 13:45 ET (17:45 GMT)
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