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United Airlines jumps after results beat “significantly low” expectations.

United Airlines jumps after results beat “significantly low” expectations.

(Reuters) – Shares of United Airlines rose about 5.3% before the open on Wednesday, driven by an upbeat second-quarter earnings outlook and strong first-quarter results despite a $200 million loss due to plane maker Boeing Co's safety crisis.

The company's forecasts indicate strong demand for travel with improved corporate spending, which raised the shares of competing companies Delta Air Lines and American Airlines by about 2% each.

“United delivered first-quarter results that mitigated significantly lower expectations following the grounding of the Boeing 737 MAX 9 in January,” Peter McNally, an analyst at Third Bridge, said in a note.

United, a prominent Boeing customer, cut its annual delivery estimate for new planes by 25% as the planemaker struggled with production and certification delays.

The January 5 incident, in which the cabin panel of an Alaska Airlines plane exploded in mid-air, has raised uncertainty about the certification of Boeing's larger model, the Max 10, which was scheduled for delivery this year and was expected to be… A hub for a United plane. fast.

Operationally, the rest of United's fleet has performed well and fares have held up, partly due to lower industrial capacity, McNally said.

A shortage of aircraft has constrained the capacity of major airlines, hampering their efforts to capitalize on booming demand.

In the current quarter, United expects adjusted profit of $3.75 to $4.25 per share, compared with analysts' average forecast of $3.76, according to LSEG data.

“Overall, these results and guidance could at least bring some relief to what we would describe as an oversold situation in United shares,” Citi analyst Stephen Trent said in a note, while reiterating a “buy” rating on the company’s shares.

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United Commerce shares 4.2 times forward earnings estimates, compared to the industry average of 7.4.

The company reported a loss of 15 cents per share in the first quarter, versus expectations for a loss of 57 cents.

(Reporting by Shivansh Tiwari in Bengaluru; Editing by Devika Simnath)