United Airlines has announced a reduction in its aircraft delivery plan for 2024 due to the ongoing Boeing crisis, which has caused significant delays. The airline now expects to receive only 61 new narrow-body planes this year, down from the 101 it initially anticipated. Additionally, contracts for as many as 183 planes in 2024 have been affected.
CEO Scott Kirby explained that the fleet plan had to be adjusted to reflect the reality of what manufacturers are able to deliver. Despite the challenges, United sees an opportunity to grow its mid-continent hubs and expand its profitable international network from its coastal hubs. To compensate for the delays caused by Boeing, United plans to lease 35 Airbus A321neos in 2026 and 2027, turning to Boeing’s rival for new planes as the U.S. manufacturer faces production caps and increased scrutiny.
United’s decision to reduce its annual capital expenditure estimate from $9 billion to $6.5 billion reflects the impact of the Boeing crisis on its finances. The airline is also facing a safety review by the Federal Aviation Administration (FAA), which has further delayed its planned growth. As a result, United has had to postpone services between Newark, New Jersey, and Faro, Portugal, as well as between Tokyo and Cebu, Philippines.
The grounding of the Boeing 737 Max 9 in January led to a temporary loss of $200 million for United in the first quarter. Consequently, the airline reported a net loss of $124 million, compared to a loss of $194 million during the same period last year. However, revenue increased by nearly 10% to $12.54 billion, with capacity also rising by over 9% year-on-year.
In terms of financial expectations, United exceeded Wall Street estimates for the first quarter. The airline reported an adjusted loss per share of 15 cents, compared to an expected loss of 57 cents per share. Revenue also surpassed expectations, reaching $12.54 billion against an estimated $12.45 billion. Looking ahead, United anticipates earnings of between $3.75 and $4.25 per share in the second quarter, surpassing analysts’ estimates of around $3.76 per share.
United’s full-year earnings forecast remains unchanged at between $9 and $11 per share. The airline expects to generate the majority of its profits during the second and third quarters, which coincide with peak travel seasons. Following the announcement, United’s shares rose by over 4% in after-hours trading.
Overall, United Airlines’ aircraft delivery plan for 2024 has been significantly impacted by the Boeing crisis, resulting in delays and a reduction in new plane acquisitions. The airline is adapting its fleet plan to reflect the realities of the manufacturing situation. Despite the challenges, United remains optimistic about its growth opportunities and has turned to Airbus as an alternative to Boeing. The ongoing FAA safety review has further hindered United’s plans for expansion, but the airline is confident in its ability to deliver strong financial results in the coming quarters.
