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United Flying to New Cities

Zacks Equity Research

The largest U.S. airline, United Continental Holdings Inc. (UAL), plans to expand its services to 10 new cities to bolster its both domestic and international footprint. All the new flights are awaiting approval from government.

United expects to add daily round-trip services to Taiwan and Paris from San Francisco on April 9, 2013 and April 11, 2013, respectively. This will enhance the company’s presence at the San Francisco hub, where it operates more than 300 flights.

Additionally, the company is also bolstering its hub at Chicago O'Hare International Airport by introducing more flights to U.S., Canada, Mexico and the Caribbean. The new flights include:

  • Daily service from Chicago to Monterrey, Mexico effective December 19, 2012
  • Daily service from Chicago to Thunder Bay, Canada effective February 14, 2013
  • Daily service from Chicago to Jackson, Mississippi effective November 4, 2012
  • Weekly peak-season service from Chicago to Nassau, Bahamas effective February 9, 2013
  • Daily peak winter service from Chicago to Anchorage, Alaska from December 19, 2012 to January 2, 2013

Currently, United offers nearly 600 nonstop flights each day out of O’Hare to more than 150 destinations worldwide. Further, the company plans to introduce the following domestic and international routes from other domestic hubs:

  • Three-times-daily service from Denver to Williston, North Dakota effective November 4, 2012
  • Daily service from Los Angeles to British Columbia, Canada effective December 19, 2012
  • Daily service from Washington/Dulles to El Salvador effective December 19, 2012

In the last 18 months, United Continental has expanded its routes from U.S. hubs to international destinations such as Guadalajara, Mexico; Montreal, Canada; Port-au-Prince, Haiti; Shanghai, China, and Stuttgart, Germany. In addition, the company also added new intra-Asia routes between the Tokyo hub and Hong Kong and between the Guam hub and Okinawa, Japan.

Further, United Continental recently started new flights between Houston and Lagos, Nigeria; New York/Newark and Buenos Aires and Istanbul; Washington/Dulles and Manchester, U.K. and Dublin, Ireland; and will soon start a service between Denver and Tokyo.

Besides the expansion of services, United Continental is making continued progress in increasing its on-board products in both domestic and international fleets, thereby enhancing its value and profitability. Nevertheless, the company competes strongly with Delta Air Lines Inc. (DAL) and Southwest Airlines Co. (LUV) that have large flight expansions on the card.

We are maintaining our long-term Neutral recommendation on United. For the short term, the stock retains a Zacks #1 (Strong Buy) Rank.

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