United Airlines recently announced that it is cutting its aircraft-delivery expectations for the year in response to delays from Boeing. Originally, the airline had expected to receive 101 new narrow-body planes this year, but it has revised that number down to just 61. This change in plans is a result of the ongoing safety crisis faced by the plane-maker, which has impacted the delivery schedule for United and other airlines. United’s CEO, Scott Kirby, stated that the fleet plan adjustments are necessary to align with the realities of what the manufacturers are currently able to deliver.
In light of Boeing’s production constraints and increased federal scrutiny, United has decided to turn to Airbus for new planes. The airline plans to lease 35 Airbus A321neos in 2026 and 2027, signaling a shift away from Boeing as its primary aircraft supplier. Earlier this year, United announced that it was removing Boeing’s Max 10 from its fleet plan and converting some Max 10 orders to Max 9s. This strategic move comes amidst the ongoing challenges faced by Boeing, including a temporary grounding of its 737 Max 9 planes.
United’s decision to revise its aircraft delivery expectations has had financial implications for the airline. The temporary grounding of the Boeing 737 Max 9 in January resulted in a $200 million hit to United’s earnings for the quarter. Despite this setback, the airline reported a net loss of $124 million in the first quarter, an improvement from the $194 million loss in the same period last year. Revenue increased by nearly 10% to $12.54 billion, driven by a capacity increase of over 9% year-over-year. United’s performance in the quarter exceeded Wall Street’s expectations, with a loss per share of 15 cents adjusted compared to a loss of 57 cents expected, and revenue of $12.54 billion compared to $12.45 billion expected.
Looking ahead, United Airlines remains optimistic about its financial prospects for the second quarter and full year. The airline expects to post earnings of between $3.75 and $4.25 per share in the second quarter, surpassing analysts’ estimates. Additionally, United reiterated its full-year earnings forecast of between $9 and $11 per share. Historically, airlines generate the bulk of their profits in the second and third quarters, particularly during peak travel season. United’s shares surged more than 4% in after-hours trading following the announcement of its revised fleet plan.
The challenges faced by United Airlines due to Boeing’s delays and safety concerns have forced the airline to make significant adjustments to its fleet plan. By revising its aircraft delivery expectations and turning to Airbus for new planes, United is positioning itself to navigate through the current industry challenges. Despite the financial impact of the Boeing 737 Max 9 grounding, United’s performance in the first quarter exceeded expectations, providing a glimmer of hope for its future financial results. As the airline looks ahead to the second quarter and beyond, it remains focused on capitalizing on growth opportunities and maintaining a strong position in the competitive aviation industry.
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