(Reuters) – United Airlines’ shares rose about 6% in premarket trading on Tuesday after an upbeat 2024 profit forecast from the carrier that is facing a potential hit from grounding its entire fleet of Boeing 737 MAX 9 jets earlier this month.
The forecast also lifted shares of rivals Delta Air Lines and American Airlines by about 2.5% each, as they ride a wave of strong international travel demand. Shares of domestic carrier Southwest Airlines rose 3.2%.
United Airlines said on Monday it expects an adjusted profit of $9 to $11 per share in 2024, with the midpoint well above analysts’ average expectation of $9.58.
The airline, however, expects an adjusted loss of 35 cents to 85 cents per share in the current quarter, assuming all its 79 MAX 9 planes remain grounded through the end of January.
Boeing’s MAX 9 jets were grounded indefinitely by the Federal Aviation Administration for safety checks after a cabin panel of an Alaska Airlines plane blew off mid-flight on Jan. 5.
United Airlines on Monday also reported fourth-quarter adjusted profit of $2 a share, topping Wall Street estimates of $1.70, on strong holiday travel demand.
“The quarter’s beat included good cost control and lower fuel prices,” Citi analyst Stephen Trent wrote in a note, while reiterating a “buy” rating on the company’s stock.
Shares of United were trading 4.04 times forward profit estimates, compared with an industry median of 6.61.
“Overall demand for travel remains strong and is expected to grow in the years ahead,” Third Bridge senior analyst Christopher Raite said.
While a full recovery of business travel is unlikely, airlines such as United still have growth ahead in international markets and healthy U.S. consumers, Raite added.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shinjini Ganguli)
Comments