By It has been a turbulent start to the year for airline stocks, and the outlook remains uncertain. The upcoming earnings report from United Airlines, as well as the results from other major carriers later in the week, will provide insight into the future of the sector.
The aviation industry experienced a rocky beginning in 2024, which has created an opportunity for positive surprises that could help jumpstart a recovery. The U.S. Global JETS exchange-traded fund saw a decline of 4.3% this year through Thursday, following last year’s growth of 11%.
While United’s earnings report could serve as a catalyst for change, the grounding of Boeing MAX 9 planes may overshadow its performance. United Airlines and Alaska Air are the two main U.S. carriers affected by the MAX 9 grounding, which has been in effect for over two weeks due to an emergency incident on an Alaska Airlines flight.
Since the incident, United has already canceled 11% of its scheduled flights through Thursday, and Alaska Airlines, whose report is expected on January 25th, has canceled 22% of its flights.
The airline industry is navigating through challenging times, and the upcoming earnings reports will play a crucial role in determining the course of action for investors and passengers alike.
Airlines Outlook: United’s 2024 Guidance and Challenges Ahead
Introduction
Rising Cost Pressures
Concerns over cost pressures in the airline industry have been mounting. New pilot pay deals and escalating fuel prices have contributed to the profitability dilemma faced by airlines. As a result, many industry players are closely monitoring United Airlines’ 2024 full-year guidance. This guidance is critical, especially after Delta Air Lines recently revised its long-term target, leading to a market selloff. Delta now expects earnings per share to range between $6 and $7 this year, falling short of its previous target of more than $7.
United’s Expected Performance
United Airlines’ performance in the coming years will be crucial in determining the sector’s overall recovery. Analysts polled by FactSet anticipate United to report earnings per share of $9.53. This figure will undoubtedly attract significant attention from investors and industry experts alike. Additionally, Wall Street predicts that United will achieve earnings per share of $1.70 on revenue of $13.5 billion in the fourth quarter.
Impact of Blocked Merger
The recent decision by a federal judge to block JetBlue Airways’ proposed $3.8 billion merger with Spirit Airlines is expected to work in favor of the Big 4 airlines – Delta, United, American, and Southwest. Had the merger gone through, it would have created the fifth-largest U.S. airline and posed a greater low-cost competitor to challenge the dominance of these four industry giants.
Conclusion
As United Airlines prepares to unveil its 2024 full-year guidance, industry attention remains focused on the company’s performance and the broader challenges facing the airline sector. Rising costs, supply-chain issues, and the impact of mergers all play a significant role in shaping the industry’s future. Stakeholders eagerly await United’s announcement as it has the potential to reshape the landscape of the airline industry.
The Future Outlook for Airlines
By Callum Keown
The aviation industry has faced significant challenges in recent times, with the global pandemic causing widespread disruptions and changes to travel patterns. However, there is hope on the horizon for airlines as we look towards the long-term future.
It is important to note that while these developments present positive opportunities for the industry, they are not immediate game-changers. In the near-term, airlines will have to explore alternative strategies in order to navigate the current landscape.
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