United Airlines Stock (NASDAQ:UAL)
United Airlines Holdings (NASDAQ:UAL) had a solid third quarter, much above analyst estimates, and the business is optimistic about 2023. United Airlines stock gained more than 8% on Wednesday as investors piled in.
What’s the Reason?
After two disastrous years of travel due to the pandemic, airlines have seen demand go up in 2022. However, investors have been on edge about the future of airline stocks due to concerns that rising prices and the possibility of an economic downturn may cut into demand in the coming months.
United Airlines stock provided some much-needed comfort to its shareholders on Tuesday night. Analyst predictions of $2.27 per share in profitability on sales of $12.75 billion were significantly surpassed by the airline’s reported adjusted earnings of $2.81 per share in the third quarter.
The airline is anticipating a successful Christmas season, with operational margins for the fourth quarter expected to rise beyond 2019 pre-pandemic levels. United anticipates a quarterly profit of at least $2 per share, far more than the average estimate of $0.98.
United CEO Scott Kirby has expressed confidence that the company would continue to have solid financial performance in the fourth quarter, 2023, and beyond, despite mounting fears of an economic recession.
What Should You Do Now?
Historically, airline industry fluctuations have tracked macroeconomic trends. That’s probably going to hold true for a very long time. There are growing signs, however, that this cycle may be an exception.
We entered 2022 anticipating high levels of pent-up demand due to the epidemic. Early indications are that this demand is outstripping the typical worries about spending as interest rates rise. And it isn’t only United saying it: Delta Air Lines issued a similarly optimistic prediction last week.
United anticipates hiring 15,000 workers this year and the same amount again next year. At the post-earnings conference, CEO Kirby noted that the flexibility afforded by hybrid employment had led to “permanent structural shifts” in the need for leisure time since the epidemic.
Investors should maintain caution since many fortunes have been wasted on the promise that “this time is different.” If the economy continues to struggle, or if we enter a severe recession, demand might plummet suddenly. Alternatively, the workplace changes stimulating demand for leisure travel may also have unanticipated long-term consequences for business trips.
However, United Airlines stock is optimistic about the future. The investors are psyched to ride along.
Featured Image- Unsplash @ Jason Leung
Author Shariq Khan 
