United Airlines’ Surprising Earnings Projection Lifts Stocks

United Airlines shares surged more than 17% on Wednesday, reaching a seven-month high after the company announced its second-quarter earnings forecast, significantly exceeding Wall Street expectations. Despite facing ongoing aircraft delivery delays from Boeing, United anticipates earnings of between $3.75 and $4.25 per share, surpassing analysts’ predictions of approximately $3.76 per share. This announcement comes at a crucial time when airlines typically generate the bulk of their profits during the peak travel seasons of the second and third quarters.

Adjustments in Fleet Acquisition Amid Boeing’s Challenges

United has reduced its aircraft delivery expectations for the year, now expecting to receive only 61 new narrow-body planes, a sharp decline from the 101 anticipated at the start of the year. This adjustment reflects the current limitations faced by manufacturers, as noted by CEO Scott Kirby, who emphasized the company’s strategy to capitalize on growth opportunities at its mid-continent hubs and expand its international network. In light of Boeing’s production caps and increased federal scrutiny, United has also turned to Airbus, planning to lease 35 A321neos for 2026 and 2027.

Financial Adjustments and Regulatory Challenges

United’s proactive management extends to its financial strategy, having lowered its annual capital expenditure forecast to $6.5 billion from about $9 billion. Moreover, the airline is currently under a Federal Aviation Administration safety review, which has affected some of its expansion plans, such as delaying new routes from Newark to Faro, Portugal, and from Tokyo to Cebu, Philippines. Despite these challenges, United remains committed to its full-year earnings forecast of between $9 and $11 per share.

How will United’s strategic adjustments and the ongoing FAA review impact its operations and financial performance in the upcoming quarters?