United Airlines reported its fourth quarter earnings on Tuesday, presenting earnings and revenues that exceeded expectations. However, the airline is anticipating continued operational challenges, with the company highlighting the impacts of the Boeing 737 MAX 9 grounding and casting doubts on its 737 MAX 10 order.
Strong Fourth Quarter Results
United shares rose by nearly 6% in after-hours trading on Tuesday on the heels of its earnings announcement, with the gain in share price holding steady throughout Wednesday. Shares of other airlines that are scheduled to release earnings reports later this week – Alaska Airlines, American Airlines, and Southwest Airlines – were also up following United’s announcement.
Although the Chicago-based carrier’s fourth quarter adjusted earnings were down by 18.7% to $2.00 per share and revenue growth slowed to 9.9%, these metrics still outpaced expectations. Similarly, full-year financial results were also better than anticipated.
The airline also celebrated numerous other successes from 2023, from opening its largest United Club lounge to its largest international schedule expansion. Operationally, United carried the largest number of passengers in a year in the airline’s history at 165 million and had its busiest travel period ever during the last two weeks of December.
First Quarter Loss Forecasted
In a separate filing with the Securities and Exchange Commission, United revealed that it expects to post an adjusted loss between 35 cents and 85 cents per share in the first quarter of 2024. It attributed the loss to the Federal Aviation Administration (FAA)’s grounding of Boeing 737 MAX 9 aircraft earlier this month, following a door plug blowout and subsequent decompression on an Alaska Airlines flight on January 5.
United currently has 79 Boeing 737 MAX 9 aircraft in its fleet, representing around 8% of the airline’s capacity. The nationwide grounding has led to the cancellation of hundreds of flights throughout the month.
CEO Casts Doubt on 737 MAX 10 Order
In an interview with CNBC following the release of the earnings report, United Chief Executive Officer Scott Kirby expressed disappointment at the Boeing 737 MAX situation and raised concerns about the future of the carrier’s Boeing 737 MAX 10 order.
The largest 737 MAX variant has yet to be signed off by regulators, and United seems to believe that its entry into service will continue to be delayed. Kirby has stated that the 737 MAX 9 grounding was “the straw that broke the camel’s back” for the airline and that United has started on working on “alternative plans” for its fleet that do not include the 737 MAX 10.
(Photo: AirlineGeeks | Katie Zera)
While the Boeing 737 MAX 10 variant does not have the door plug that caused the Alaska Airlines incident earlier this month, the grounding could further delay regulatory approval of the type. In a statement following Kirby’s remarks, Boeing Commercial Airplanes Chief Executive Officer Stan Deal apologized to its customers, stating, “We have let down our airline customers and are deeply sorry for the significant disruption to them, their employees and their passengers.”
