United Airlines slumps after forecast of surprise loss on labour costs

UNITED Airlines Holdings warned it will post a surprise loss this quarter as it grapples with high labour costs.

The adjusted loss for the first three months will be 60 US cents to US$1 a share, the Chicago-based airline said in a filing with the Securities and Exchange Commission on Monday (Mar 13). Analysts had expected profit of 69 US cents a share, according to the average of estimates compiled by Bloomberg.

The latest projection marks a sharp turn from January when United forecast profit in the first quarter of as much as US$1 a share. The company now anticipates expenses from a potential new collective bargaining agreement with its pilots union to accrue this quarter rather than next quarter.

The airline, which is set to address investors on Tuesday at an industry conference, left unchanged its 2023 per-share earnings target of US$10 to US$12.

United’s shares slid 5.6 per cent in extended trading at 5.02 pm in New York. The stock had soared 30 per cent this year through Monday’s close amid optimism about the global travel recovery.

The company is the latest US airline to acknowledge the hefty costs of new labour agreements, as rivals including American Airlines Group talk with their respective unions. Delta Air Lines, whose pilots approved a new contract this month, surprised investors in January with a worse-than-expected first-quarter profit forecast due to higher labour expenses.

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United’s loss prediction sullied an otherwise largely optimistic update, with the carrier saying operating revenue in the first quarter will be up 51 per cent from the prior year in a “strong demand environment”. It also said the second quarter is shaping up better than expected. BLOOMBERG