United Airlines (UAL) Q4 2023 earnings

United Airlines on Monday forecast a first-quarter loss due to the Federal Aviation Administration’s grounding of Boeing 737 Max 9 planes this month after a part blew out during an Alaska Airlines flight operated with that type of aircraft.

United expects to post an adjusted loss of between 35 cents and 85 cents a share for the first three months of the year, it said in a filing. The forecast is the first indication for investors of the financial damage caused by the FAA’s grounding of the planes, issued a day after the incident on Alaska Airlines Flight 1282 on Jan. 5.

United has 79 of the aircraft in its fleet, more than any other carrier, followed by Alaska. United said Monday it expects the planes to remain grounded through Jan. 26, though its forecast assumes it won’t be able to fly the planes at all this month.

Both airlines have canceled hundreds of flights this month while the planes remain grounded for inspection. The more common Boeing 737 Max 8, which is in fleets at United, American and Southwest, isn’t affected by the grounding order.

United said it expects unit costs, excluding fuel, to be up mid-single-digit percentage points in the first quarter from last year, three points of that impact coming from the Max grounding. It forecast flat unit revenues for the first three months of the year.

The first-quarter warning from United comes after a relatively strong holiday period, though airlines have faced several winter storms in the first few weeks of January.

United shares were up more than 6% in after-hours trading.

For the last three months of 2023, United posted net income of $600 million, down nearly 29% from a year ago. Revenue came in at $13.63 billion, which was up almost 10% from a year earlier and ahead of analysts’ estimates. Adjusting for one-time items, United’s fourth-quarter earnings of $2 a share fell from $2.46 a year earlier.

Here’s what United reported in the fourth quarter compared to what Wall Street expected, based on average estimates compiled by LSEG, formerly known as Refinitiv:

• Adjusted earnings per share: $2.00 vs. an expected $1.69
• Total revenue: $13.63 billion vs. an expected $13.54 billion

United hit its full-year adjusted earnings target of between $10 and $12 a share, posting $10.05 for the full-year 2023.

“Despite unpredictable headwinds, we delivered on our ambitious EPS target that few thought possible — and set new operational records for our customers,” said United Airlines CEO Scott Kirby in an earnings release.

The airline touted strong travel demand late last year and solid bookings so far this year. For the full-year 2024, United forecast adjusted earnings of between $9 and $11 a share, within analysts’ estimates.

United executives are holding an earnings call at 10:30 a.m. ET on Tuesday when they are likely to face questions about compensation from Boeing for the grounding. Alaska reports before the market opens on Thursday, and Boeing is scheduled to report results Jan. 31.

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