United Airlines Posts Strong Profits Despite MAX Headwinds

United Airlines' UAL fourth-quarter cargo revenue fell 5.4% from a year ago to $316 million, but overall revenue was up 3.8% to $10.9 billion and the carrier reported diluted earnings per share of $2.53, which was up nearly 50% from the same period a year ago, according to results released Tuesday after the markets closed.

The company reported operating income of $861 million, an increase of nearly 36% from a year ago, and net income of $641 million.

For the full year, United posted operating revenue of $43.26 billion, net income of just under $3.01 billion and earnings per share of $11.58. The carrier's 2019 cargo revenue declined 4.7% to just under $1.18 billion. Cargo ton miles, a measure of cargo traffic, were down 1.4% in the quarter and 2.8% for the year.

United achieved its strong financial performance despite extra costs and lost capacity due to the grounding of the Boeing Co BA 737 MAX last March. United has canceled almost 14,000 flights scheduled on MAX aircraft through early June. Fourteen of its planes are idle, with more that were scheduled for delivery in 2019 and 2020.

United CEO Oscar Munoz said 2019 was a "great year," highlighted by the company achieving its $11-$13 adjusted-earnings-per-share target a year ahead of schedule. "With a four-quarter streak of expanding profit margins, when all the results are in we expect our full-year 2019 pre-tax margin growth to be the highest amongst our largest competitors," he said.

Munoz was optimistic about the carrier's future, saying, "I believe the outlook for United's future has never been brighter." The company said it expects earnings per share of $0.75 to $1.25 in the first quarter of 2020.

But the future also holds a good deal of uncertainty. In addition to the ongoing Boeing 737 MAX grounding, which Boeing said Tuesday it expects to last into the summer, the prospect of a contagious respiratory virus impacting passenger traffic now looms on the horizon.

Media in China reported six deaths linked to the the coronavirus, and the Centers for Disease Control and Prevention on Tuesday confirmed the first case of the virus in the U.S. According to the CDC, the patient recently returned from Wuhan, China, where an outbreak of pneumonia caused by the virus has been ongoing since December.

"While originally thought to be spreading from animal-to-person, there are growing indications that limited person-to-person spread is happening," the CDC said. "It's unclear how easily this virus is spreading between people."

On Friday, the CDC began implementing passenger health screening at San Francisco International, New York Kennedy and Los Angeles International airports, and this week will begin screening at Chicago O'Hare and Atlanta. United has an extensive route network to the Asia Pacific. Chicago, Los Angeles and San Francisco are among its hubs.