United Airlines Holdings Inc Posted smaller-than-expected first-quarter losses on Tuesday, thanks to higher capacity and lower-than-estimated operating expenses excluding fuel.
The airline’s adjusted loss for the quarter through January was 63 cents a share, lower than the 73-cent loss analysts had expected, according to Refinitiv data. A potential deal on the pilots’ contract contributed to the loss, even though overall operating costs other than fuel were lower than last year.
The Chicago-based airline said that expects a profit of between 3.50 and 4 dollars per share in the second quarter, versus analyst estimates of $3.65 per share, according to a Refinitiv survey.
The company also stood by its full-year earnings forecast.
Airlines are enjoying strong consumer demand despite rising risks of economic downturn. This has allowed them to mitigate rising labor and fuel bills with higher ticket prices.
Some analysts aren’t sure the travel boom will last long.
Last month, United spooked investors with a profit warning, stoking concerns about the industry’s pricing power. This concern was heightened last week when American Airlines Group Inc revised its earnings forecasts, which fell short of Wall Street estimates.
Delta Air Lines’ earnings report last week allayed some of those concerns, but a manufacturing issue with the 7 planesBoeing Co. 37 MAX it has cast a shadow over industry plans to add more flights to take advantage of the busy summer travel season.
United is one of the airlines most exposed to Boeing delivery delays. It has yet to receive nearly three-quarters of its MAX aircraft order for this year.
“The aggressive profit forecast has been based on the addition of new aircraft to the company’s fleet,” said Peter McNally, an analyst at research firm Third Bridge. “This is totally dependent on the Boeing 737s.”
