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United Airlines (UAL) Forecasts Q4 Revenues to Decline 70% Y/Y
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Amid a spike in coronavirus cases, United Airlines Holdings Inc (UAL - Free Report) anticipates total revenues to weaken and cash burn to worsen in the fourth quarter of 2020 compared with its previous expectation.
In a SEC filing, the airline revealed that for the last month, ended Dec 10, 2020, it has experienced “continued deceleration in forward bookings as a result of the spike in COVID-19 cases and travel restrictions.” Consequently, the carrier expects total revenues to decline close to 70% year over year in the fourth quarter, compared with its previous estimate of a decrease of approximately 67%.
Additionally, United Airlines predicts average daily cash burn to be approximately $24 million-$26 million in the fourth quarter as opposed to $15 million-$20 million anticipated previously. Moreover, as a result of deceleration in bookings and change in working capital, the carrier estimates $10 million of average debt principal payments and severance payments per day in the same period.
Amid this bleak scenario, recent positive news on vaccine developments offers a ray of hope to the airline. The carrier stated that current bookings for the third quarter of 2021 are down approximately 40% compared with a decline of approximately 70% for December 2020 and January 2021 travel, thanks to upbeat updates on vaccine candidates developed by various companies. The airline is confident about a recovery in travel demand in 2021 and beyond.
Shares of Landstar, UPS and GATX have gained more than 26%, 59% and 37% in the last six months, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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United Airlines (UAL) Forecasts Q4 Revenues to Decline 70% Y/Y
Amid a spike in coronavirus cases, United Airlines Holdings Inc (UAL - Free Report) anticipates total revenues to weaken and cash burn to worsen in the fourth quarter of 2020 compared with its previous expectation.
In a SEC filing, the airline revealed that for the last month, ended Dec 10, 2020, it has experienced “continued deceleration in forward bookings as a result of the spike in COVID-19 cases and travel restrictions.” Consequently, the carrier expects total revenues to decline close to 70% year over year in the fourth quarter, compared with its previous estimate of a decrease of approximately 67%.
Additionally, United Airlines predicts average daily cash burn to be approximately $24 million-$26 million in the fourth quarter as opposed to $15 million-$20 million anticipated previously. Moreover, as a result of deceleration in bookings and change in working capital, the carrier estimates $10 million of average debt principal payments and severance payments per day in the same period.
United Airlines Holdings Inc Price
United Airlines Holdings Inc price | United Airlines Holdings Inc Quote
Amid this bleak scenario, recent positive news on vaccine developments offers a ray of hope to the airline. The carrier stated that current bookings for the third quarter of 2021 are down approximately 40% compared with a decline of approximately 70% for December 2020 and January 2021 travel, thanks to upbeat updates on vaccine candidates developed by various companies. The airline is confident about a recovery in travel demand in 2021 and beyond.
Zacks Rank & Key Picks
United Airlines carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Transportation sector are Landstar System, Inc. (LSTR - Free Report) , United Parcel Service, Inc. (UPS - Free Report) and GATX Corp. (GATX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Landstar, UPS and GATX have gained more than 26%, 59% and 37% in the last six months, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>