United Airlines Surpasses Q4 Estimates, Faces Q1 Loss Amid 737 Max 9 Grounding, Optimistic Full-Year Guidance

United Airlines Surpasses Q4 Estimates, Faces Q1 Loss Amid 737 Max 9 Grounding, Optimistic Full-Year Guidance

United Airlines surpasses Q4 estimates but anticipates a wider loss in the current quarter, impacted by the recent grounding of Boeing’s 737 Max 9 jet. Chicago-based United (NASDAQ:UAL) experiences a premarket surge, influencing gains in American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL).

The Q4 results reveal United’s adjusted earnings per share at $2.00 on revenue of $13.63 billion, attributed to its record-breaking travel period in the last two weeks of December, offsetting “unpredictable headwinds.” Analysts’ expectations of $1.70 per share on revenue of $13.55 billion are exceeded. The decrease in aircraft fuel expenses during the quarter also contributes to a 0.1% reduction in cost per average seat mile, indicating improved efficiency compared to the same period last year.

Despite the positive Q4 performance, United anticipates a wider loss in Q1, ranging from $0.35 to $0.85, primarily due to the grounding of the 737 Max 9. This follows a mid-air cabin panel blowout on a model operated by Alaska Airlines. Wall Street projections had anticipated a loss of $0.18 per share.

United, having the largest number of 737 Max 9s in its fleet, estimates an approximately 3 percentage-point increase in incremental adjusted expenses per available seat mile in Q1 due to the ongoing issues.

However, analysts at Morgan Stanley find United’s guidance for full-year adjusted diluted earnings per share of $9.00 to $11.00 “comfortably above consensus” and “very encouraging,” indicating optimism despite challenges posed by the 737 Max 9.

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