United Airlines: Will Take Flight With Global Demand
- The U.S. is set to reopen travel with the U.K. and the EU starting in November pending more details.
- Atlantic departures remain down 50% from 2019 levels providing some of the best upside to recapture 2019 traffic levels.
- Back in 2019, United Airlines had 43% of ASMs assigned to international travel.
- The stock is cheap as a reopening of Atlantic traffic is a big part in the airline recapturing the 2019 EPS levels of $12 in a few years.
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While air travel demand cooled off during August, the regulations restricting international travel are on the verge of being relaxed. United Airlines Holdings (UAL) led domestic carriers in international travel prior to the COVID-19 restrictions on flying outside of the domestic market. My investment thesis is very Bullish on the stock after a big sell off leading into a reopening of international travel for the vaccinated.
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Disclosure: Long UAL. Please review the disclaimer page for more details.
Update - Oct. 19
The airlines continue to report a strong boost in the business during 2022 while the stocks are still trading at the lows.
- United Airlines (NASDAQ:UAL) shares trade up after the company reports positive Q3 GAAP net income of $0.5B and adjusted EPS of -$1.02, beats by $0.66.
- Q3 capacity remains below 2019 levels at 28%, while total operating revenue is down 31.9% from the pre-pandemic level.
- The company plans to capitalize on projected record flying levels in Europe by expanding international capacity by 10% in 2022 compared to 2019 levels while keeping domestic capacity flat. United notes that international margins are steadily improving.
- "We're solidly on track to achieve the targets we set for 2022," said CEO Scott Kirby. "From the return of business travel and the planned re-opening of Europe and early indications for opening in the Pacific, the headwinds we've faced are turning to tailwinds."