United stock pops on Q1 results despite $200M Boeing hit

Shares of United Airlines (UAL) are trading higher on Wednesday following the company's better-than-expected first-quarter results. The airline managed to beat estimates on both revenue and adjusted earnings per share (EPS), despite taking a $200 million hit due to having to ground its Boeing (BA) 737 Max-9 fleet.

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This post was written by Angel Smith

Video transcript

SEANA SMITH: United Airlines shares are taking off this morning after posting a narrower-than-expected loss for the first quarter. The company, though, did cite a $200 million hit from the Boeing groundings. Despite that, though, you're still looking at gains of about 6%.

Pras Subramanian here to break this all down. And, Pras, pretty strong results, especially in the face of the hit that we were just talking about from Boeing groundings.

PRAS SUBRAMANIAN: Yeah, that narrower than expected loss. If they didn't have that loss because of the groundings, they would have had a profit for the quarter. So I think there's some enthusiasm there from the investor community, better outlook for the quarter coming up from a profit point of view. We're seeing robust demand for both domestic and transatlantic travel, so that's really good there.

But you mentioned that Boeing hit, the $200 million hit because of the groundings. CEO Scott Kirby not happy about this, talking about how Boeing needs to own up to these things and they need to basically make up for the loss that they've suffered here. They're going to go to Airbus for some other planes to match up what they're missing from Boeing's delivery schedule coming up, so not all good news here. They had to cut pilot hours as well. So it's looking good from a point of view of a demand point of view, but also a little bit shaky from a can they get enough planes to do what they need to do for the next couple of years.

BRAD SMITH: Yeah, it's really interesting, especially on the pricing side, too. And we were having a conversation over near our desks just about where the demand has actually outpaced in the early innings of 2024, 2023, which was that new marker, post pandemic of, OK, now we've got a top 2023 numbers, and 2024 is doing that, and the question of how much that's actually passing through to the revenue that these companies are seeing right now. Revenue was really only up per available seat mile by about 1% in this quarter for United, as well, here.

PRAS SUBRAMANIAN: Yeah, I guess it's kind of hard to top those good numbers last year. I know you spoke to the Delta CEO to also. They're seeing the same kind of growth, as well, both domestic and I think-- I'm sorry, both business, as well as leisure travelers. So I think that's sort of-- I think people are surprised at the activity here, the travel activity here, both from commercial and also people like you and I.

BRAD SMITH: Absolutely.