April 17 (Reuters) - United Airlines shares rose 10% in morning trade on Wednesday, driven by an upbeat profit forecast for the second quarter and strong first-quarter results despite a $200 million hit over planemaker Boeing's safety crisis.
The carrier's foreca st signaled strength in travel demand as corporate spending improved, lifting shares of rival Delta Air Lines and American Airlines by about 3% and 4%, respectively.
"United delivered Q1 results that cleared dramatically lowered expectations in the wake of the Boeing 737 MAX-9 grounding in January," Third Bridge analyst Peter McNally said in a note.
United, a prominent customer of Boeing, cut its annual delivery estimate for new aircraft by 25% as the planemaker has been grappling with production and certification delays.
Aircraft shortages have constrained capacity for major airlines, hindering their efforts to cash-in on booming demand.
United CEO Scott Kirby during an interview with CNBC on Wednesday said he was "confident that the 787 Dreamliner is a safe airplane", commenting on an investigation by the U.S. aviation regulator on a Boeing whistleblower's claims that the company dismissed safety and quality concerns in the production of its 787 and 777 jets.
The planemaker's manufacturing practices will come under scrutiny in two Senate hearings on Wednesday, one of which is expected to feature testimony and documents from the whistleblower.
In the current quarter, United expects an adjusted profit of $3.75 to $4.25 per share, compared with analysts' average expectations of $3.76, according to LSEG data.
"Overall, these results and guide could bring at least some relief to what we would characterize as the oversold situation in United's shares," Citi analyst Stephen Trent said in a note, while reiterating a "buy" rating on the company's stock.
Shares of United trade 4.2 times forward profit estimates, compared with an industry median of 7.4.
"Absent the grounding of the MAX 9s, United would have reported a profitable March quarter," Deutsche Bank analysts said.
Reporting by Shivansh Tiwary in Bengaluru; Editing by Devika Syamnath
Source: Reuters