Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

United Airlines shares higher as earnings beat overshadows profit warning

Published 2024-01-23, 02:34 p/m
© Reuters.  United Airlines shares higher as earnings beat overshadows profit warning
BA
-
BAC
-
UAL
-

Proactive Investors - United Airlines (NASDAQ:UAL) Holdings Inc (NASDAQ:UAL) shares traded more than 6% higher as the airline’s warning that its losses this quarter will be greater than expected due to the latest grounding of Boeing (NYSE:BA) jets was outweighed by investor optimism over the company’s prospects for the remainder of the year.

The airline said that due to the Boeing problems, it now expects a loss in the range of $0.35 to $0.85 per share in its first quarter of 2024, assuming its MAX 9 planes are grounded until the end of January.

MAX 9 flights were halted indefinitely by US authorities on 5 January after a door blew off on an Alaska Air flight.

The airline has 79 jets grounded currently. Between them, United and Alaska account for 70% of the MAX 9 fleet with thousands of flights cancelled since the incident.

US regulator the Federal Aviation Administration (FAA) has also ordered inspections of the door plugs on another of Boeing’s planes, the 737- 900ER.

United has 136 of these and said it has found no issues on the two-thirds of the fleet it has inspected so far.

In the fourth quarter of 2023, United posted a profit of $800 million or $2 per share, well ahead of forecasts of $1.65, on revenues of $13.6 billion that it said were buoyed by strong holiday demand.

For 2023 overall, net income was $2.6 billion.

Analysts at the Bank of America (NYSE:BAC) (BoA) wrote in a note to clients that United’s 4Q earnings beat and 2024 earnings per share (EPS) guidance of $9 to $11 per share, above the consensus estimate of $9.54, were key to giving investors confidence in the company.

They added that the airline’s first quarter revenue outlook indicates continued outperformance.

“The 1Q 2024 unit revenue outlook of flat (or slightly down excluding an accounting charge) is better than the consensus and our expectations of down around 2% and better than Delta’s flat to negative 3% outlook,” they wrote.

“This likely continues United’s unit revenue outperformance versus the industry despite what will be greater than industry capacity growth even after adjusting for the 737 MAX 9 grounding.”

The BoA analysts reiterated their ‘Buy’ rating on the stock and awarded it a $65 price objective.

United stock was up 6.2% at US$40.82 on Tuesday afternoon.

Read more on Proactive Investors CA

Disclaimer

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.