Boeing 737 Max: airlines declare their profits

This month, US airlines will be explaining to investors how the Boeing 737 Max's global strand – poised to begin its fifth month – is impacting their bottom line during the busiest time of the year. year for the industry.

Airlines benefit from demand for air transport. Rates are on the rise, according to some estimates by analysts. Fuel prices are down compared to last year. All this is good news for carriers and their shareholders, but investors will also want to know how they respond to this demand during the busiest travel season of the year, with dozens of planes out of service for security reasons.

The Federal Aviation Administration and regulators around the world immobilized the popular Boeing 737 Max jet aircraft in mid-March, following two fatal accidents – one in Indonesia in October and the other in October. Ethiopia in March – which killed 346 people. Boeing has developed a hotfix for an aircraft anti-stall system that investigators have involved in both accidents, but regulators have not yet done so, forcing carriers to cancel thousands of flights during the busiest time of the year.

Nevertheless, the airplanes, which went into service in May 2017, still make up only a small portion of US airline fleets. The immediate impact can therefore be minor. But the regulators did not say when they would allow the 737 Max jets to fly again.

Here are some things to watch for when US airlines publish their results, starting with Delta on Thursday:

• DeltaS shares are up nearly 19% since the beginning of the year, more than any other major US airline. The airline does not have 737 Max aircraft in its fleet and "has benefited from the customer benefits of competitors and partners impacted by the grounding of the aircraft," notes Cowen & Co. The week Lastly, the airline provided revenue per available seat The kilometer, a key industry measure that determines the number of passengers carried for each seat it carries, would be in the upper part of its previous range, rising by approximately 3.5% for the quarter ended June 30, compared to the previous year. Analysts surveyed by Refinitiv expect earnings per share of $ 2.24 for the second quarter, an increase of nearly 27% from a year ago, for a turnover of $ 1.25 billion. approximately 12.5 billion USD.

• United has 14 Boeing 737 Max planes in its fleet and last month it announced that it was pulling the plane out of its schedule until Labor Day, a month longer than previously planned. The impact is smaller compared to some of its competitors competing with traditional airlines that have more aircraft tied up, but investors will look for updates to its emergency plans. President and CEO Oscar Munoz said some travelers may not want to fly the Max even after regulators have approved a fix for the aircraft. Analysts estimate earnings per share at $ 4.04, up 25 percent from the second quarter of 2018, and $ 11.3 billion in revenue. The Chicago-based airline was an investor favorite last year, as its aggressive expansion plan, which shareholders were initially mocking, yielded higher profits. United shares have risen by about 8% so far this year. The carrier reports its results after the bell of July 16 and holds a call for investors the next morning.

• Southwest has 34 Boeing 737 Max aircraft in its fleet of approximately 750 aircraft, more than any other US airline. The low-cost airline cut planes from its schedules until October 1, but CEO Gary Kelly told employees earlier this month that the impact could last longer than that . Leaders will likely detail the frequencies or routes they cut due to aircraft strandings and their impact on third quarter results, which is the peak of the summer season. Analysts expect the Dallas-based airline to post $ 1.34 a share in the second quarter, an increase of 6% from a year ago, and Business exceeding $ 5.9 billion. It is expected that earnings will be reported at 25:30 Eastern Time on July 25.

• American Airlines shares continue to lag behind their closest counterparts and investors will seek detailed information on an ongoing dispute with the two unions representing its mechanics, which, according to one complaint filed by American in May, would disrupt its activities. This dispute arises as the carrier's 24 Boeing 737 Max aircraft remain immobilized and have prompted it to extend cancellations until Labor Day. Executives will likely provide more information on the airline's plan to purchase the new Airbus 321XLR, the longest-running single-aisle aircraft from the European manufacturer that it is in the process of develop. The decision, announced at the Paris Air Show last month, was a loss for Boeing, as American sought to replace its aging Boeing 757 with those of its main competitor. Analysts expect earnings per share of $ 1.69, up almost 4% from a year ago, and a turnover of nearly $ 12 billion. He did not say when he will release his financial results, but analysts are waiting for him to report back around July 25th.