United Continental Holdings Inc. (UAL) announced plans to operate twice-daily nonstop flights between Denver to Dickinson, N.D., starting Jun 6, 2013. We believe the new flights will expand the company’s network capabilities as well as tap significant market opportunities.
United Continental, the largest U.S.airline, followed by Delta Air Lines Inc. (DAL), is making continued progress in optimizing its network and flight routes for greater efficiency in fleet operations. The company is reducing its domestic fleet count, retiring the older and less-efficient aircraft and reconfiguring domestic aircraft for international service.
Moreover, the company continues to improve service features and introduce products that will enhance value and profitability. The premium cabin flat-bed seats have been installed in 87% of the international fleet, including the first reconfigured and retrofitted International 767-300ER.
The company expects to complete the installation in all international flights by the end of the first quarter of 2013. Further, United Continental started offering global satellite-based Wi-Fi in Aug last year, introducing the product on Airbus A319, followed by the Boeing’s (BA) 747 and 737-900ERs.
We believe the company’s efforts to enhance customer experience will lead to revenue growth and increased market traction. However, we expect these aspects to be overshadowed by the concerns over fluctuating fuel prices, rising non-fuel expense, growing competition, new advertising policy, unionized workforce and a sluggish global economy.
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AMR Corporation (AAMRQ), which has a Zacks Rank #1 (Strong Buy), is a stock worth considering in this sector.
United Continental currently retains a Zacks Rank #3 (Hold) rating.
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