United sees Boeing's 737 MAX flying this summer, deliveries before year-end

By Tracy Rucinski

CHICAGO, April 17 () - United Airlines expects Boeing Co's grounded 737 MAX jets to return to service this summer, with deliveries resuming before the end of the year, an executive said on Wednesday, reassuring investors concerned about a prolonged suspension.

The 737 MAX was grounded worldwide in March following two fatal crashes, forcing Boeing to freeze deliveries. Boeing is under pressure to upgrade the software and convince global regulators that the plane is safe to fly again, a process expected to take at least 90 days.

United has another 16 MAX orders scheduled for delivery this year.

"The aircraft scheduled for delivery this year, we would expect to take this year," Chief Financial Officer Gerald Laderman said on a first-quarter conference call.

United posted a better-than-expected jump in first-quarter profit late on Tuesday after selling more tickets and cutting costs, and stood by its 2019 profit target despite the 737 MAX grounding. Its shares were up 4.0 percent at $88.62 on Wednesday afternoon.

Unlike other U.S. airlines that own the MAX, No. 3 United has largely avoided flight cancellations after the grounding, deferring nonessential maintenance on larger aircraft to put them on MAX routes.

But executives said on Wednesday that the strategy, manageable for a month or two, gets tougher as time goes on.

United has been expanding its available seat capacity at a faster pace than rivals but said on Tuesday it was trimming that 2019 target to reflect the grounded MAX as well as suspended flights to Delhi due to closed air space over Pakistan.

Laderman said the carrier's costs per seat mile could grow this year if the MAX aircraft remain out of service or flights to Delhi remain suspended longer than its current assumption.

Looking forward, he said United would discuss with Boeing compensation over costs incurred due to the MAX grounding, noting the temporary grounding of Boeing's 787 soon after it entered service in 2013 as a "historical reference."

Of the U.S. MAX owners, United was the first to report first-quarter results. Southwest Airlines Co , the largest global MAX operator with 34 jets, reports on April 25, followed by American Airlines Group Inc on April 26.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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