A United Airlines Boeing 737 Max 9 lands at San Francisco International Airport.
Justin Sullivan | beautiful images
United Airlines on Tuesday slashed its aircraft delivery expectations for the year as it struggled with delays from BoeingThe latest airline to face growth challenges because of the plane maker's safety crisis.
United expects to receive only 61 new narrow-body aircraft this year, down from the 101 it said at the beginning of the year, and is contracted to buy up to 183 aircraft by 2024.
“We have adjusted our fleet plans to better reflect the reality of what manufacturers can deliver,” CEO Scott Kirby said in an earnings call. “And, we will use those aircraft to take advantage of an opportunity that only United has: profitably growing our mid-continent hubs and expanding our highly profitable international network from the best coastal centers in our industry.”
United said it plans to lease 35 Airbus A321neos in 2026 and 2027, turning to rival Boeing for new planes as the US manufacturer faces its production limits and increased federal oversight. In January, United said it was removing Boeing's uncertified Max 10s from its fleet plans. The airline said it has converted some Max 10 aircraft to Max 9s.
It lowered its annual capital spending estimate to $6.5 billion from about $9 billion.
United is also facing a safety review by the Federal Aviation Administration, which has hampered some of its growth plans. A spokesperson told CNBC earlier this month that the airline would have to postpone its planned service from Newark, New Jersey, to Faro, Portugal, and service between Tokyo and Cebu, Philippines.
United earlier this month postponed its investor date, scheduled for May, “because our entire team is focused on collaborating with the FAA to review our safety protocols and that would simply send the wrong message to our team to have an enjoyable investor-focused day.” mainly on financial results.”
The airline said it would have reported a profit for the quarter if not for a $200 million loss from the temporary grounding of Boeing 737 Max 9 aircraft in January.
The FAA temporarily grounded those jets after one The door plug is blown a few minutes after one Alaska Airlines flight, causing a new safety crisis for Boeing and slowing plane deliveries to customers including United, Southwest and others.
The airline had a net loss of $124 million, or a loss of 38 cents a share, in the first quarter compared with a loss of $194 million, or 59 cents, a year earlier. Revenue increased nearly 10% in the first quarter year over year to $12.54 billion, with capacity up more than 9% year over year.
Here's what United reported for the first quarter compared to what Wall Street expected, based on average estimates compiled by LSEG:
- Loss per share: 15 cents was adjusted against an expected loss of 57 cents
- Revenue: $12.54 billion compared to the expected 12.45 billion USD
The airline is expected to post earnings of between $3.75 and $4.25 in the second quarter, well above analysts' estimates of about $3.76 a share. Airlines make most of their profits in the second and third quarters, during the peak travel season.
The carrier also reiterated its full-year earnings forecast of $9 to $11 per share.
United shares rose more than 4% in after-hours trading Tuesday.
United executives will hold a call with analysts at 10:30 a.m. ET on Wednesday.
