United Airlines (UAL -0.46%) narrowed its net loss and increased revenue in the first quarter of 2024. Here's a summary of the company's quarterly filing.
Revenue soars on higher capacity and yield
United Airlines reported a net loss of $124 million for the first quarter of 2024, an improvement from the $194 million net loss in the same period last year. Total operating revenue increased by 9.7% year over year to $12.5 billion, driven by a 10.1% rise in passenger revenue. The company attributed its revenue growth to a 9.1% increase in capacity and a 0.7% increase in yield, an airline industry metric that measures revenue per passenger per mile flown.
Operating expenses also increased by 8.4% to $12.4 billion, with notable increases in salaries and related costs due to wage rate increases and higher headcount. However, aircraft fuel expenses decreased by 6.9% despite increased flight activity, benefiting from a lower average price per gallon of fuel.
Cash flow from operating activities decreased by $295 million compared to Q1 2023, primarily due to higher employee incentive payments.
Setbacks for Boeing have a ripple effect on United
Boeing's recent challenges are having an effect on aircraft deliveries to United, and the airline reported that the two companies have a confidential arrangement as a result. With the Federal Aviation Administration grounding Boeing's 737 Max 9, and with certification of the 737 Max 10 delayed, United said it will receive compensation from Boeing in the form of credit that it will book on past and future Max 9 and Max 10 aircraft.
United had originally expected 78 aircraft from Boeing the rest of this year, but that's been reduced to 34, with 15 pushed back to 2025 and 29 to be delivered later. For comparison, United still expects to receive 22 of its 23 scheduled Airbus aircraft over the last nine months of 2024, although 21 of the 46 total Airbus planes it was expecting next year will be pushed back.
The company remains vulnerable to economic and political conditions, which could affect travel demand and operational costs. Compliance with extensive government regulations and achieving climate goals also pose ongoing challenges and financial commitments. Substantial noncancelable commitments for capital expenditures, including aircraft acquisitions, could impact financial flexibility.
What's next for United Airlines?
Key metrics to watch include passenger revenue growth, capacity utilization, and operating expense management. Additionally, developments related to the Boeing 737 MAX 10 certification and the impact of the confidential agreement with Boeing on future aircraft costs will be important factors to consider when evaluating United Airlines' financial performance and growth prospects.
