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United Airlines (UAL) managed to top first-quarter earnings estimates on both the top and bottom lines even after accounting for a $200 million hit to profits tied to the grounding of Boeing planes (BA).
Morningstar Industrials Equity Analyst Nick Owens joins the Morning Brief to talk about United's quarterly results as the airline industry contends with the fallout from Boeing's manufacturing concerns.
"In a way, you could say that the damage here was pretty limited, they have whatever it was — 50, 60 planes that they had to ground and inspect — and on $11 billion-plus in revenue for the quarter, they're saying it was a $200 million hit," Owens tells Yahoo Finance. "Which was the difference between them making money or losing money. To me, that just goes to show how narrow the margins in airlines really are."
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Luke Carberry Mogan.
Video Transcript
SEANA SMITH: Let's take a live look at United's stock. Look at that, shares jumping now up over 10%. They moved to the upside coming after the company reported better than expected quarterly results, and this comes despite losing $200 million due to troubles with Boeing's MAX 7, 9 fleet. The company is only reporting a loss here of $124 million in Q1, again, that was better than what the street was bracing itself for.
So we want to bring in Nick Owens, Morningstar industrials equity analyst. Nick, it's great to have you here. So first just your take on United's results here and really what that signals about maybe Boeing's troubles isn't going to be as big of a drag on United going forward as many analysts had initially feared.
NICK OWENS: Yeah. I think that's fair. I mean, in a way, you could say that the damage here is pretty limited. They had whatever it was-- 50 or 60 planes that they had to ground and inspect-- and on $11 billion-plus in revenue for the quarter, they're saying it was a $200 million hit, which was the difference between them making money or losing money. So to me, that just goes to show how narrow the margins in airlines really are.
BRAD SMITH: You know, I'm taking a look at and comparing some of the broader industry stats, specifically on the TSA traveler throughput, looks like they kept pace broadly with the roughly 6% higher passenger throughput that we're seeing in 2024 versus 2023. But on pricing and the revenue per annual per mile looks like in aggregate that was only higher by about 1%. Just wondering what you make of that, Nick.