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United Airlines Sees Modest Increase in Passenger Demand

Zacks Equity Research

United Airlines Holdings UAL is seeing some improvement in demand after a dramatic drop in passenger bookings amid coronavirus-related travel woes.

With ticket cancellation rates at an extremely high level, the carrier’s gross bookings declined more than 95% year over year in April. However, as of May 18, the airline has witnessed a reduction in cancellation rates and a “moderate improvement in demand” in the domestic markets as well as some international routes for the remainder of the second quarter of 2020.

While the company has lowered scheduled capacity for May and June by approximately 90% year over year, the same for July is expected to be down approximately 75%. The company will continue evaluating and cancelling flights on a rolling 60-day basis until signs of travel demand recovery are evident.

Meanwhile, the company continues to expect total adjusted capital expenditures to be below $4.5 billion in 2020. For 2021, the same is anticipated to be around $2 billion. As for aircraft delivery, United Airlines, carrying a Zacks Rank #3 (Hold), plans to accept only those deliveries that are fully financed. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Due to the coronavirus-related headwinds, shares of United Airlines have plunged more than 68% since the beginning of February, against the industry’s 55.5% decline.


 

The company’s first-quarter results bear testimony to this coronavirus-related downturn in its operations. The airline incurred a loss of $2.57 per share in the quarter. Operating revenues of $7,979 million also decreased 16.8% year over year due to 19% decline in passenger revenues. United Airlines’ peers like American Airlines AAL, Delta Air Lines DAL and Southwest Airlines LUV also incurred losses in the first quarter. While Delta Air Lines and Southwest Airlines carry a Zacks Rank #3, American Airlines carries a Zacks Rank #4 (Sell).

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