United Airlines has reported a loss of $124million in a quarter that was marred by the grounding of some Boeing planes.
The airline attributed this loss to a three-week grounding of all Boeing 737 Max 9s after a panel blew off an Alaska Airlines Max jetliner in January. The airline also revealed that it would receive far fewer new planes from Boeing this year than it had anticipated, and as a result, it has started leasing Airbus jets to supplement its fleet.
Despite these setbacks, the financial results released by United showed continued strength in demand for air travel, particularly within the United States and across the Atlantic. The airline is forecasting better-than-expected profits for the second quarter, which led to a 5% rise in United's shares in after-hours trading.
However, the first three months of the year were not without their challenges for the airline. Its chief executive reassured passengers that United remains safe despite a series of incidents including a piece of aluminium skin falling off one plane, a tyre coming off another during takeoff, and an engine fire.
These incidents led to increased oversight of the carrier by the Federal Aviation Administration. The temporary loss of its 79 Max 9 aircraft for most of January severely impacted United. The airline was forced to cancel hundreds of flights and switch planes on many others.
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United stated that the grounding cost it $200million - enough to turn a small profit into a loss for the quarter. Alaska, the only other US airline utilising the Max 9, has reported receiving an initial compensation of $160million from Boeing due to the grounding. A United official declined to comment on negotiations with the aircraft manufacturer.
Boeing's struggles in producing and delivering Max jets have resulted in United now expecting to receive just 61 of them this year, a reduction of about two-thirds from a few months ago. Due to a shortage of planes, United has already requested its pilots to volunteer for unpaid leave next month, a request that could extend into autumn.
Investigations into the blowout on the Alaska jet are anticipated to further delay Boeing's launch of a new, larger model, the Max 10, which United had ordered. Instead, United announced it will lease 35 Airbus jets set to arrive in 2026 and 2027. United has also requested Boeing for Max 9s as replacements for some of the Max 10s it ordered.
"We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver," stated CEO Scott Kirby. Chicago-based United Airlines Holdings revealed that excluding special items, it lost 15 cents per share. Analysts on average expected a loss of 58 cents per share, according to a FactSet survey.
Revenue rose nearly 10%, to $12.54billion, surpassing the Wall Street forecast of $12.45billion. United forecasted that it will earn between $3.75 and $4.25 per share in the second quarter, which would exceed analysts' average prediction of $3.73 per share.
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