Shares of United Airlines Holdings (NASDAQ: UAL) surged more than 6% in extended trading Tuesday following the release of a positive full-year outlook. However, the company also cautioned about a wider-than-expected loss in the first quarter, attributing it to the grounding of Boeing 737 MAX 9 aircraft.
United Airlines, along with competitors Delta Air Lines and American Airlines, has seen a surge in demand for premium travel post-pandemic. The company expects that the revenue from these high-margin premium offerings will continue to be robust, contributing to an adjusted profit of $9-$11 per share in 2024. This outlook surpasses the $9.58 per share estimate projected by Wall Street analysts.
Christopher Raite, a Senior Analyst at Third Bridge, stated,
“Overall demand for travel remains robust and is projected to expand in the forthcoming years.”
However, United Airlines (NASDAQ: UAL) forecasts an adjusted loss of 35 to 85 cents per share for the first quarter, assuming all MAX 9 planes remain grounded until January. Analysts had predicted a quarterly loss of 21 cents per share for the company.
The U.S. aviation regulator has grounded MAX 9 jets indefinitely for safety checks this month. This decision comes after a cabin panel fell off during an Alaska Airlines flight on January 5, leading to an emergency landing.
Airlines have not yet provided a timeline for when the grounded planes will return to service.
According to the company, the grounding of the MAX 9 planes will affect its non-fuel operating costs in the first quarter by about 3%. United and Alaska Airlines, jointly owning 70% of the MAX 9 fleet, have had to cancel thousands of flights since the incident.
The U.S. Federal Aviation Administration (FAA) has declared that the MAX 9 aircraft will stay grounded until they are deemed safe for operation. United Airlines has 79 such jets that are not in service.
The Federal Aviation Administration (FAA) in the U.S. has advised airlines flying Boeing’s 737-900ER model to conduct inspections of door plugs to confirm they are securely fastened. This comes after some operators reported issues with bolts during inspections. United Airlines, which operates 136 of these aircraft, has already completed inspections on two-thirds of its 737-900ER fleet and has reported no issues.
In addition, United Airlines (NASDAQ: UAL) reported an adjusted profit of $2 per share in the fourth quarter, surpassing Wall Street estimates of $1.70 per share. This was due to robust holiday travel demand.
As of the close on Monday, UAL stock had decreased by 0.95%. The trading volume for the day was 16,179,754 (16.17 million) shares, which is higher than the company’s daily average trading volume of 8.21 million shares.