United Airlines Holdings (UAL 3.48%) posted a smaller-than-expected quarterly loss and said issues at Boeing will not derail its full-year guidance. Investors are cheering the result, sending shares up 11% as of 10 a.m. ET.
Growing despite major headwinds
United lost $0.15 per share in the quarter on revenue of $12.54 billion, besting Wall Street's consensus estimate for a $0.57-per-share loss on sales of $12.45 billion. The company's pre-tax loss was $164 million, which is a $92 million improvement over the same quarter a year ago.
The results included a $200 million hit related to the impact of the grounding of Boeing MAX 9 jets in the quarter after an incident involving an Alaska Air Group plane. Without that hit, United would have reported a quarterly profit.
United said it is adjusting its long-term fleet strategy based on demand trends and delays expected due to Boeing's ongoing issues. But the company reiterated its guidance for full-year earnings of between $9 and $11 per share, offering some upside to the $9.67-per-share consensus estimate.
The airline grew capacity by 9.1% year over year in the quarter.
NASDAQ: UAL
Key Data Points
Is United Airlines a buy following its strong earnings report?
Airline investors have a lot to process this earnings season. The sector has held up remarkably well during a period of higher inflation and rising rates, and United appears to see no sign of a weakening in demand.
United's ability to adjust its fleet to minimize the impact of Boeing's delays stands in contrast to comments made by Southwest Airlines that caused that stock to drop ahead of earnings season.
In recent years, United's new management has worked to position the longtime laggard as an industry leader. These latest results highlight the good work that has been done.
Investors need to be aware that airlines are cyclical and a recession would likely send the stocks downward. But for those interested in investing in the sector, United is an attractive choice.
