What happened

Shares of United Continental Holdings (UAL -1.55%) rose 11.4% in April, according to data provided by S&P Global Market Intelligence, as the airline was able to brush off continuing concerns about Boeing's 737 MAX airplane and deliver strong quarterly results. It's a fresh sign that the airline's turnaround strategy is advancing as planned.

So what

On April 16, United reported first-quarter adjusted earnings of $1.15 per share, easily beating the $0.94 consensus estimate. Revenue of $9.59 billion matched expectations. United Continental earned $0.49 per share in the first quarter of 2018.

A United Continental 737 taxis towards the runway.

United Continental has been flying high despite issues with the 737 MAX. Image source: United Continental.

The airline has been an underperformer in recent years, but it has taken dramatic steps to streamline operations and rethink its flight schedules and route maps to try to move closer to rivals, including Delta Air Lines. In a statement accompanying the earnings release, CEO Oscar Munoz said, "We delivered another strong financial quarter in which we made important progress on our customer investments while making strategic decisions to manage our costs and producing pre-tax margin growth that we expect will lead our peers."

Total passenger revenue was up 7.1% in the quarter, and passenger revenue per available seat mile increased 1.1% year over year, while unit cost per available seat mile declined 2.1%. United was also optimistic, saying it expects pre-tax margins to improve to 11% to 13% in the second quarter, up from 10.4% a year prior.

Now what

The news wasn't all good for United Continental. The airline is an operator of the still-grounded 737 MAX, leading to 130 flight cancellations in April and a projected 900 cancellations in May.

The real issue for United Continental is that the airline still trails Delta in key financial metrics. Delta, for example, expects its adjusted pre-tax margin to be between 14% and 16% this quarter. Yet United Continental trades at a premium to Delta, currently valued by the market at 10.7 times earnings versus Delta's 9.7 multiple.

United Continental management deserves high marks for the job it has done turning the airline around. But it's Delta, and not United, that deserves a premium valuation, raising questions about how much higher United shares can climb.