United Airlines execs to face questions on Boeing 737 jet groundings impact amid higher Q2 earnings
United Airlines glided through the first part of summer, as strong travel demand pushed average fares higher, but the grounding of Boeing 737 Max jets will become a bigger challenge in the months ahead.
United said Tuesday that second-quarter profit soared 54 percent, to $1.05 billion. The results beat expectations, and United slightly raised its forecast of full-year profit.
The Chicago-based airline is set to hold an earnings call with investors on Wednesday at 10:30 a.m. ET, and executives will likely face questions on how the grounding of Boeing 737 Max jets after two deadly accidents will affect the company's future.
The airline was counting on the Max to become a bigger part of its fleet, growing from 14 planes to 30 by the end of September, and 28 more of them next year. That plan is now in jeopardy, as Boeing has halted Max deliveries with no clear idea yet when the plane will be certified to fly again.
The missing planes will leave a huge gap in United's schedule and cut into the airline's revenue. United has already canceled more than 8,000 flights by taking the Max out of its schedule through Nov. 3, and the number will grow the longer the planes remain grounded.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UAL | UNITED AIRLINES HOLDINGS INC. | 95.24 | +0.84 | +0.89% |
| BA | THE BOEING CO. | 149.27 | +5.87 | +4.09% |
Without those planes, Boeing is slowing down its expansion plans. The airline had expected to boost passenger-carrying capacity by 4 percent to 6 percent this year, but on Tuesday it said it will grow more modestly, between 3 percent and 4 percent.
The slower growth also reflects United's decision earlier this year to suspend flights between New York and New Delhi after Pakistan closed its airspace to civilian flights because of rising tension with India. Pakistan lifted restrictions Monday, and a United spokesman said the airline is considering resuming the flights to India in the coming weeks.
The second-quarter profit was up from $683 million a year earlier.
United said that excluding special gains and charges, it earned $4.21 per share in the quarter. The average estimate among 16 analysts surveyed by Zacks Investment Research was $4.07 per share.
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United does not publish average fares, but a stand-in figure — revenue per seat for each mile flown — rose 2.5 percent over last year's second quarter. That was at the top end of United's guidance to investors and helped propel total revenue 6 percent to $11.4 billion, slightly higher than analysts expected.
The nation's third-largest airline by revenue narrowed and raised its forecast of full-year earnings to between $10.50 and $12 per share. It previously forecast $10 to $12 per share.
Before the financial report, shares of United Airlines Holdings Inc. gained $2.60, or 2.9 percent, to close at $93.92. They were up about another 1 percent in late trading.
The Associated Press contributed to this report.