United: MAX grounding causes Q1 2024 pre-tax loss of $164 million

United Airlines has been negatively impacted by the 737 MAX 9 grounding in the first quarter of 2024, the airline has highlighted in its latest financial results, ‘without which the company would have reported a quarterly profit’. The financial impact of the grounding, noted by United to be in the region of $200 million, contributed to a pre-tax first quarter loss of $164 million. However, this Q1 figure was still a $187 million improvement on an adjusted basis over the same quarter last year. During the period, United generated $2.8bn operating cash flow and a free cash flow of $1.5bn, with total operating revenue up 9.7% (at $12.53bn) from the first quarter last year. This was assisted by a rise in capacity of 9.1%, with the carrier noting a double-digit percentage increase in business demand quarter over quarter, as compared to pre-pandemic. United adds it was also ‘able to take advantage of a number of opportunities to adjust domestic capacity which drove meaningful improvements in first quarter profitability’. However, the impact of ongoing issues with Boeing may yet further impact the airline, with United Airlines CEO Scott Kirby stating: “We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver”. With the FAA’s production capacity restraints on Boeing expected to be ongoing, United has revised its initial 101 narrowbody deliveries (as of the beginning of 2024) to 61 narrowbody and five widebody aircraft to be delivered in 2024. The airline has also converted a portion of its (as-yet-uncertified) MAX 10 aircraft orders to MAX 9s from 2025 through 2027, whilst maintaining the right to covert more Boeing MAX 10s into 8s or 9s ‘as needed’. Additionally, to help mitigate the potential impact of ongoing Boeing production delays, United has agreed lease agreements with two lessors for 35 new A321neos expected in 2026 and 2027. “We’ll use those planes…. [to] profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs,” concluded Kirby. United’s first-quarter diluted loss per share of $0.38 was also noted to be ‘ahead of expectations’, with the airline continuing to anticipate full-year 2024 adjusted diluted earnings per share of $9 to $11.