Shares of United Airlines Holdings Inc. saw a surge in after-hours trading on Monday, following the airline’s announcement of a full-year profit forecast that exceeded expectations. This positive outlook is attributed to increased sales across both United’s premium-cabin offerings and its more affordable basic economy fares.
United anticipates adjusted earnings per share of between $9 and $11 for the full year, surpassing FactSet’s projection of $9.53. As a result, shares rose by 5.3% after hours.
In the fourth quarter, the company reported net income of $600 million, or $1.81 per share, compared to $843 million, or $2.55 per share, during the same period the previous year. When accounting for adjustments, United’s earnings amounted to $2 per share. Additionally, revenue experienced a 9.9% growth, reaching $13.63 billion.
Analysts surveyed by FactSet expected adjusted earnings per share of $1.69 and revenue of $13.55 billion.
United credits its diversified revenue strategy for its continued success, stating that it serves as a significant competitive advantage. The premium cabin witnessed a 16% increase in revenue for the quarter year over year, while the basic economy offering saw a substantial 20% revenue increase.
The airline industry has recently faced a wave of uncertainty, with concerns surrounding the outlook for 2024 after two years of “revenge” travel. Spirit Airlines Inc. and JetBlue Airways Corp., whose merger deal was blocked by a federal judge last week, are currently working to salvage the arrangement. Analysts remain skeptical about Spirit’s ability to survive independently.
Additionally, the Federal Aviation Administration (FAA) recommended inspections for a second Boeing aircraft model, the 737-900ER, after a panel detached from a Boeing 737 Max 9 jet mid-flight operated by Alaska Airlines. Consequently, the FAA grounded several Max 9s for inspection. United operates a fleet of 79 Max 9 jets. The company anticipated that grounding these jets from January 6, 2024, through January 31, 2024, will result in an approximate 3 percentage point increase in adjusted unit costs.
United Airlines’ strong performance and positive full-year profit outlook demonstrate its resilience in the face of industry challenges. Through its diverse revenue strategy and commitment to customer satisfaction, United continues to position itself as a leader in the aviation sector.
