United Airlines Q1 results preview: FAA scrutiny, Boeing woes might weigh on sentiment

United Airlines (NASDAQ:UAL) fell 0.22% on Monday, ahead of its first-quarter results on April 16th, with investors looking to see if impacts from FAA investigations, Boeing MAX grounding are spilling into the current quarter.

Recently, United called off its May Investor Day conference amid a Federal Aviation Administration (FAA) investigation into a series of non-fatal incidents that included a plane going off the runway in Houston, a lost tire over San Francisco, an engine fire in Florida, and a cracked windshield in route to London.

A March Bloomberg report also indicated that the aviation authority was pondering steps to halt the expansion of United Airlines, such as limiting the carrier from adding more routes after several safety mishaps.

The FAA scrutiny comes amid heightened concerns about commercial aviation safety stemming from a January incident involving a Boeing (BA) 737 Max plane being flowing by Alaska Airlines (ALK).

On this front, United faces another issue. The company recently asked its pilots to take unpaid time off in May due to a shortage of new Boeing aircraft.

This further builds on a March memo in which United told its pilots that it would “slow the pace of pilot hires this year due to continued aircraft certification delay and manufacturing delays at Boeing.”

In light of the production delays at Boeing, United was reported to be close to switching its existing order with Airbus' A321neo.

For the upcoming results on Tuesday, the Chicago-based carrier is expected to post a quarterly EPS of -$0.57 (+9.5% Y/Y) along with a revenue of $12.39B (+8.4% Y/Y).

In January, United said it expected a Q1 loss due to the grounding of the Boeing Max 9, but for the year, it forecasted an adjusted EPS of between $9 and $11.

Over the last two years, UAL has beaten EPS estimates 75% of the time and revenue estimates 63% of the time.

Over the last three months, EPS estimates have seen one upward revision and seven downward. Revenue estimates have seen six upward revisions and two downward.

Last week, Delta (DAL) traded higher after topping topline and bottom-line estimates and commented that it saw continuing strong travel demand in the current quarter.

Since the start of the year, United shares have risen about 1.16%, underperforming the S&P 500 index. Seeking Alpha's Quant ratings have recommended the company as a Buy, on profitability and valuation prospects.