June 13, 2024
Finance

United Airlines will be ‘prepared’ for 2024 earnings losses


United Airlines (UAL) shares moved higher in Monday’s after-hours session after reporting a fourth-quarter 2024 earnings beat. The airline operator is predicting less than stellar results for its first quarter 2024 due in part to the grounding of its Boeing (BA) 737 Max 9 fleet.

Boyd Group International President Mike Boyd joins Yahoo Finance Live to talk United’s 2024 outlook after discovering manufacturing errors in Boeing jets.

While Boyd believes United Airlines is prepared for any earnings losses, he goes on to say that if Federal Aviation Administration (FAA) inspectors “find anything else going on with production at Boeing, I think there’s going to be fallout like we haven’t seen since… well, I would say since the COVID issue” for Boeing and the airline industry.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: United shares are jumping after reporting better than expected fourth quarter earnings, although the first quarter forecast leaves something to be desired. Here to discuss United’s latest report and all things airlines, we’re joined by Mike Boyd, Boyd Group International President.

Hey, Mike, so we’re looking– honestly, we’re looking at the stock reaction and we’re a little confused here because the first quarter loss forecast looks pretty negative, but is it because people are just putting it all down to what’s happening with these Boeing Jets and not about demand? What do you think’s going on here?

MIKE BOYD: No, United’s right on the money here. We were just looking at it this morning. The third and fourth quarter are not going to be as rosy as we thought it was going to be. We do have inflation. We do have discretionary traffic starting to decline, if you will. That’s the ultra low cost carriers are seeing, but United will too, but United’s prepared.

They understand the international marketplace. So, it will be down– there’s no question, but United will be on top of it. Put it that way.

JOSH LIPTON: And, Mike, do we have any sense here– your expectations in terms of timeline of how long the Max 9 could really be parked?

MIKE BOYD: Well, if I– look, I’d be in Las Vegas making book if I knew that. It’s really tough. But right now we’ve got a really ugly situation. Now they’ve added the 900 ER. That’s another 163 airplanes that United is flying through the skies that might get grounded. And what I really fear here is the public’s going to get spooked on anything with the letter or the number 737. We have the first ones that was 79 of their airplanes– 6 on order not delivered, and now another 163.

I really don’t know. But whatever it is, Boeing’s got a lot of yogurt to get through. Put it that way.

JULIE HYMAN: I mean, should they be spooked, Mike? Would you fly on one of these things?

MIKE BOYD: Yeah, I probably would. I grew up in this business, and I don’t have a really good sense in some cases. But the fact of the matter is we do have a situation where we do have an FAA that’s on top of it. But right now if they find anything else going on with production at Boeing, I think there’s going to be fallout like we haven’t seen since, well, I would say since the COVID issue.

So, let’s hope that doesn’t happen, but, yeah, I have concerns with manufacturing. When you have things not screwed on right– that’s not a good thing. What system allowed that to happen? Don’t have an answer yet.

JOSH LIPTON: And, Mike, it was interesting– we had these reports today. You know, United CEO Scott Kirby apparently not happy, Mike, at all about these quality issues at Boeing, venting his frustrations apparently. That doesn’t sound like good news at Boeing when one of your biggest customers is that unhappy, right?

MIKE BOYD: Well, of course not. When they’re the biggest customer for the 737-10. And Mr. Kirby has a red pencil too. He can draw a line through that if he really wants to. They have 100 of those on order. So Boeing better toe the line here, but Scott is entirely right. You don’t take 79 of their airplanes and have them grounded, and now there’s another 163– 900ER’s that might be affected, too. I would suspect Mr. Kirby is on the warpath.



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