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Earnings preview: Can United Airlines overcome the 737 Max crisis?

Amidst the Boeing 737 Max crisis, United Airlines (NASDAQ: UAL) is all set to report its second-quarter financial results on Tuesday, July 16, after the regular trading hours. The company was relatively less affected by the 737 groundings as it has fewer of these aircraft in its fleet.

United has only 14 737 Max aircraft, compared to 24 in American’s (NASDAQ: AAL) fleet and 34 in Southwest’s (NYSE: LUV). Still, there may be some impact from the groundings, but the street expects improved traffic and higher domestic travel demand to offset most of it.

united airlines stock
Photo by Emiel Molenaar on Unsplash

Analysts have projected Q2 earnings of $4.05 per share, compared to just $3.23 per share in the same period last year. This outlook also takes into account a stabilized jet fuel price, which has been wreaking havoc with airline performance for most of last year. 

In the past one month, the EPS estimate has been raised twice from $4.01, suggesting increased optimism on the stock. It may be noted that United Airlines has surpassed earnings estimates in three of the past four quarters.  

READ: Everything you need to know about JetBlue stock

Revenue is expected to grow over 5% to $11.34 billion, helped by 2-2.5% projected increase in PRASM (Passenger Revenue per Available Seat Mile). Foreign currency weakness may, meanwhile, squeeze margins during the quarter.

Look out for any management updates on how it plans to deal with the 737 groundings going forward if passengers refuse to fly in it even after the faults are fixed.

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United Continental - United Airlines (UAL) Q1 2019 earnings infograph
United Continental (UAL) Q1 2019 Earnings Infograph

Competitor Delta Air Lines (NYSE: DAL) last week reported better-than-expected revenue and earnings for the second quarter, allowing its shares to climb 2.2%. Both American and Southwest Airlines would report quarterly results on July 25.

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