In response to lingering issues with Boeing, United Airlines announced a significant reduction in its aircraft delivery expectations for the year. The renowned airline is only expecting 61 new narrow-body planes this year, a sharp fall from the anticipated 101. The original contract even called for as many as 183 planes by 2024.
United Airlines CEO, Scott Kirby, indicated that the airline has tweaked its fleet plan aligning with the actual delivery capabilities of the manufacturers. The new aircrafts when delivered, will be utilized optimally to expand United’s mid-continental hubs and grow their international network.
The airline is even planning to lease 35 Airbus A321neos in 2026 and 2027, marking a strategic shift in favor of Boeing’s competitor. This move follows United’s decision earlier this year to exclude Boeing’s uncertified Max 10 from its fleet plan, with some Max 10 planes being converted to Max 9s.
In paying the price for these changes, United has scaled down its annual investment forecast from approximately $9 billion to $6.5 billion. Further, the airline is also grappling with an ongoing safety review by the Federal Aviation Administration (FAA), causing some postponed growth measures, like service from Newark, New Jersey, to Faro, Portugal, and from Tokyo to Cebu, Philippines.
For the uninitiated, the FAA grounded Boeing 737 Max 9 jets temporarily after a door plug incident on an Alaska Airlines flight raised safety concerns. Disrupted deliveries of these planes to customer airlines, including United and Southwest, have posed unexpected challenges.
As a result of the grounding, United absorbed a $200 million blow, turning what could have been a profitable quarter into a loss. Despite this, United reported a decrease in their net loss for the first quarter, standing at $124 million, down from a $194 million loss a year prior. Surprisingly, revenue rose by approximately 10% in the first quarter to $12.54 billion, along with a more than 9% annual rise in capacity.
United now predicts earnings between $3.75 and $4.25 for the second quarter, exceeding analysts’ estimates of around $3.76 per share. The airline continues to stand by its full-year earnings forecast, between $9 and $11 per share, as airlines typically make a majority of their profits in the second and third quarters.
United’s shares rose by more than 4% in after-hours trading on Tuesday, and the company is set to have a call with analysts.
