United Airlines Rides on Low Fuel Costs Amid Coronavirus

We recently issued an updated report on United Airlines Holdings, Inc. UAL.

The coronavirus outbreak is taking a significant toll on United Airlines. Thanks to slump in air-travel demand, the carrier incurred a loss in each of the first two quarters of 2020 with passenger revenues declining 59.7% in first-half 2020.

With air-travel demand at an unprecedented low level, the airline’s June capacity fell approximately 88% year over year. The August schedule is expected to be down approximately 65%.

United Airlines Holdings Inc Price

United Airlines Holdings Inc Price

United Airlines Holdings Inc price | United Airlines Holdings Inc Quote

Amid coronavirus concerns, low fuel prices should partly offset the adversity. In fact, low fuel prices (down 7.1% in 2019 and 16.6% in first-half 2020) are aiding the carrier’s bottom line.

The company took several cost-controlling measures like freezing hiring (except for crucial roles), delaying salary increases as well as giving employees the option to apply for voluntary leave or early retirement. Notably, total operating costs declined 36.6% in first-half 2020. The carrier is also trying to preserve cash by cutting down on capital expenditures and operating expenses.

Zacks Rank & Stocks to Consider

United Airlines currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the Zacks Transportation sector are Landstar System LSTR, Knight-Swift Transportation Holdings KNX and United Parcel Service UPS. Landstar System and Knight-Swift sport a Zacks Rank #1 (Strong Buy) at present, while UPS carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Landstar System, Knight-Swift and UPS is pegged at 12%, 15% and 7.7%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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