United Airlines (UAL) stock rose in after-hours trading on Monday after the airline announced fourth-quarter 2024 profit. The airline is forecasting poor performance in the first quarter of 2024, due in part to the grounding of the Boeing (BA) 737 Max 9 aircraft.
Mike Boyd, president of Boyd Group International, appears on Yahoo Finance Live to discuss United Airlines' outlook for 2024 following the discovery of a manufacturing error in Boeing's jets.
Boyd said he believes United Airlines is bracing for any revenue loss, but that Federal Aviation Administration (FAA) inspectors “discovered something else was going on with Boeing's production.” “I think there will be an impact that we've never seen before.” Since then…well, I think for Boeing and the airline industry since the coronavirus issue.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor's note: This article was written by luke carberry morgan.
video transcript
[AUDIO LOGO]
Julie Hyman: Although there is still room for improvement in the outlook for the first quarter, United shares soared after the company reported better-than-expected fourth-quarter profits. We're here with Mike Boyd, President of Boyd Group International, for the latest United Airlines report and all things airline related.
Hey Mike, so we're looking at — to be honest, we're looking at the stock price reaction, and we're a little confused here because the Q1 loss expectations look pretty negative. But is that because everyone is just silently watching? It's not a question of demand, but what's going on with Boeing's jets? What do you think is happening here?
Mike Boyd: No, United has money to spare here. We were just looking at it this morning. The third and fourth quarters will not be as rosy as we expected. Inflation is certainly happening. Discretionary traffic is starting to decline. This is something the ultra-low-cost carriers are considering, and so is United, but United is ready.
They understand the international market. That means we will be down the table – there is no doubt that United will be at the top of the table. Please say so.
Josh Lipton: And Mike, do we have any sense here? What are your expectations in terms of a timeline of how long the Max 9 can actually be parked?
Mike Boyd: Well, if I had known that, I would have made the book in Las Vegas. It's really difficult. But now we are in a really bad situation. This time, 900 ER has been added. That means an additional 163 of United's planes in the sky could be grounded. What I'm really afraid of here is that people will be afraid of anything with the letters or numbers 737 on it. Initially, it acquired 79 planes — six on order and undelivered, and now has 163 more.
I really don't understand. But whatever it is, Boeing has a lot of yogurt to overcome. Please say so.
Julie Hyman: I mean, should they be scared, Mike? Would you like to fly in one of these?
Mike Boyd: Yeah, I probably would. I grew up in this industry and in some cases I don't have very good taste. But the fact is, we have a situation where the FAA is on top of that. But at this point, if it turns out that something else is going on with Boeing's production, I think there will be an impact that we haven't seen since the coronavirus crisis. Masu.
So I hope that doesn't happen, but yeah, there are concerns about manufacturing. It's not a good thing if things aren't screwed properly. What kind of system made this possible? I don't have an answer yet.
Josh Lipton: And Mike, that was interesting. These reports were received today. As you know, his CEO at United, Scott Kirby, doesn't seem to be happy about Boeing's quality issues at all and is venting his frustrations. It can't be good news for Boeing when one of his biggest customers is so dissatisfied, right?
Mike Boyd: Of course not. When they are the 737-10's biggest customer. And Kirby also has a red pencil. He can draw the line there if he really wants to. They have ordered 100 of them. So Boeing had better draw the line here, but Scott is absolutely right. There is no need to take away 79 aircraft and ground them. In addition, his 163 900ERs may also be affected. I think Mr. Kirby is participating in the war.
