United Airlines posts $3.3B profit for 2023 but MAX grounding will affect 2024 

A United Airlines Boeing 737-900ER suffered significant damage to its fuselage following an American Airlines baggage cart hitting it at ORD
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United Airlines posted a $3.3 billion profit for 2023. However, the airline is warning that the ongoing situation regarding the Boeing 737 MAX 9 will harm its finances in the first quarter of 2024. 

For the full year, the Chicago-based carrier said profits climbed to $2.6 billion from $737 million in 2022. Adjusted full-year profit came in at $3.3 billion. Additionally, the airline’s full-year adjusted earnings per share (EPS) came in at $10.05, which fell within the target of $10-12 that the carrier’s board set at the beginning of 2023. Full-year revenue for 2023 rose to $53.7 billion, up almost 20% over the $45 billion seen in 2022. 

However, despite the solid overall performance for 2023, in the fourth quarter (Q4) of 2023 (October to December 2023), the airline posted a $600 million profit, down almost a third versus Q4 2022 due to rising costs. When adjusted to exclude special charges, unrealized losses on investments, and income tax benefits on the adjustments, its Q4 profit totaled $664 million, still down 18% from last year’s $811 million. 

Additionally, in Q4 2023, the company posted almost 10% higher revenue of $13.6 billion, over 2022 figures. The quarterly decline in profit can be attributed to a rise in expenses, which includes 28% higher salary costs, as well as higher maintenance costs.  

During the fourth quarter, expenses totaled $12.6 billion, up 14.6% from the same period last year. Capacity as measured in available seat miles (ASKs) rose 14.7% compared to Q4 2022. During the full year, United’s capacity rose 17.5% over 2022 and load factor during the quarter fell slightly to 82.3% from 85.2% a year ago. 

“Our plans really came together in 2023,” said United Airlines chief executive Scott Kirby. “Despite unpredictable headwinds, we delivered on our ambitious EPS target that few thought possible and set new operational records for our customers. Looking ahead, we expect these trends to continue and United is incredibly well-positioned to capitalize on them and to deliver on our short- and long-term financial targets.”  

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United ended 2023 with 1,358 aircraft in its fleet, an increase of 20 over the number at the end of 2022. That said, the company said it expects to lose money in the first quarter of 2024 (Q1) due to the grounding of all US-registered Boeing 737 MAX 9 aircraft with plug doors of the type that failed in the Alaska Airlines incident in January 2024. The US Federal Aviation Administration (FAA) grounded 171 of the type after a plug door broke free on an Alaska Airlines MAX 9 mid-flight. 

United Airlines has 79 Boeing 737 MAX 9s in its fleet, more than any other carrier worldwide, followed by Alaska Airlines. Both airlines have been forced to cancel hundreds of flights so far since the type was grounded pending inspections ordered by the FAA. United has already announced that it expects the planes to remain grounded until January 26, 2024, and is assuming that it will not be able to fly them at all until at least February 2024. This will have a substantial negative implication on its Q1 2024 financial performance, the carrier warned. 

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On January 21, 2024, the FAA advised that older 737-900ERs should also undergo inspection as they feature similar plug doors. United has 136 of this variant of the 737 in its fleet. While this specific subtype has not been grounded like its sisterships, the FAA has ordered visual inspections to be carried out on all aircraft of this type.

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