This week, United Airlines (UAL) posted fourth-quarter earnings and a 2025 outlook that made the airline’s shares soar.
On Jan. 22, the stock reached a more than five-year high of $115.85 after United reported full-year earnings of $4.2 billion. That tally included quarterly revenue of $14.7 billion before expenses — a 7.8% increase from the fourth quarter of 2023.
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United Airlines CEO is raising concerns about supply issues affecting the number of new planes being built.
United Airlines chief says certain aircraft experiencing supply challenges
While much of the earnings call was spent praising Unite’s leadership and worker base on success in a market that left several other airlines struggling, Chief Executive Scott Kirby also raised the alarm over certain challenges with supply and certification of a specific type of Boeing (BA) aircraft.
“Widebody supply, both airframe, and engine, is even more challenging than narrowbody,” Kirby said about United’s commitment to purchase up to 200 new narrowbody planes, such as the 787 Dreamliner, between 2024 and 2032.
Related: United Airlines Revamping Fleet With Huge Boeing Plane Order
As first reported by aviation website SimpleFlying, Kirby told investors that airlines that ordered large numbers of widebody planes have been waiting a long time for deliveries. Both Boeing and Airbus EADSF have previously spoken about problems with the production of large widebody planes. New models like the Boeing 777-8F and Airbus A350F are being developed, while the supply of certain parts remains too slow to keep up with orders.
Citing delivery delays, airlines are reworking or canceling international routes
As a result, deliveries have fallen behind expectations.
“We will most probably be in just as much of a supply crunch on the widebodies as we’re experiencing on single aisles,” Airbus Chief Commercial Officer Christian Scherer said at a conference in Istanbul in 2023.
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Delays to widebody supply lasted into 2024 and, as Kirby said during the recent earnings call, are now expected to remain a challenge until at least 2030. Air India, American Airlines AAL, British Airways, Virgin Atlantic, and Lufthansa (DLAKF) are some of the major carriers that recently canceled certain transatlantic routes on which the larger double-aisle planes are commonly used due to delivery delays.
Kirby told investors that the delay would benefit large cities from which airlines can fly the most people when carriers have to choose which flights to prioritize. He further said that the high costs of flying out of major airports in New York, LA, Chicago and San Francisco have pushed out many low-cost airlines, a market segment in which he predicts growth to slow significantly in the second half of the 2020s.
“Cost convergence has been the most impactful in the big cities,” he said in the earnings call.
This will, in turn, help mainstream carriers with the capacity and resources to continue running flights out of these cities and that passengers who may have previously gone with a low-cost carrier will be left to take. After the earnings were announced, United stock soared by more than 6% between Jan. 21 and 22. Year-over-year, it is up by more than 180% in an upward trajectory that outpaces even the meteoritic rise of the AI firm Nvidia (NVDA) .
Related: Veteran fund manager issues dire S&P 500 warning for 2025
