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Here's Why Investors Should Retain United Airlines Stock Now
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United Airlines (UAL - Free Report) is benefiting from its proactive expansion efforts. The company’s initiative toward sustainability is also encouraging. However, UAL is grappling with high operating expenses and weak liquidity.
Factors Favoring UAL
United Airlines is significantly enhancing the travel experience for customers with disabilities, especially those using wheelchairs. Since launching its digital sizing tool in March 2024, more than 20,000 users have contributed to improved customer satisfaction scores. The recent collaboration with the United Spinal Association allows the airline to gain valuable insights to better meet the needs of its passengers. The option for customers to seek refunds on fare differences for wheelchair accommodations shows UAL’s commitment to inclusivity and customer-centric policies, reinforcing its dedication to accessible travel.
The company's partnership with the San Francisco 49ers is another stepping stone toward sustainability, as the airline aims to achieve net-zero greenhouse gas emissions by 2050 and has already purchased more sustainable fuel than any other U.S. airline in 2023. This collaboration marks a significant milestone, making the 49ers the first team in the National Football League to purchase sustainable aviation fuel (SAF). This alternative to conventional jet fuel can reduce greenhouse gas emissions by up to 85% over its entire lifecycle, showcasing UAL's proactive efforts to lead in environmental stewardship.
United Airlines' proactive efforts to enhance connectivity and meet rising travel demand are encouraging. The airline has introduced 12 new domestic routes linking major cities in the United States and Canada, along with nearly 200 new flights to Milwaukee and Chicago. This expansion not only benefits travelers but also bolsters the company's position in the competitive aviation market.
Shares of UAL have surged 109.1% in the past year compared with the industry’s growth of 64.9% in the same period.
Image Source: Zacks Investment Research
UAL: Key Risks to Watch
High operating expenses are hurting the company’s bottom line. This elevation in expenses has been primarily driven by increased labor costs. In the third quarter of 2024, operating expenses surged by 4.2% year over year.
Labor costs, comprising salaries and benefits, which represent 32.5% of total operating costs, increased by 10.4% year over year.
United Airlines exited the third quarter of 2024 with a current ratio (a measure of liquidity) of 0.79. A current ratio of less than 1 indicates that the company is likely to struggle to meet its short-term obligations. Reduced pricing power is another concern.
UAL’s Zacks Rank
UAL currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include Kirby (KEX - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 8.7%. Shares of CHRW have risen 51.5% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26.4% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average beat is 11.8%. Shares of WAB have climbed 92.4% in the past year.
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Here's Why Investors Should Retain United Airlines Stock Now
United Airlines (UAL - Free Report) is benefiting from its proactive expansion efforts. The company’s initiative toward sustainability is also encouraging. However, UAL is grappling with high operating expenses and weak liquidity.
Factors Favoring UAL
United Airlines is significantly enhancing the travel experience for customers with disabilities, especially those using wheelchairs. Since launching its digital sizing tool in March 2024, more than 20,000 users have contributed to improved customer satisfaction scores. The recent collaboration with the United Spinal Association allows the airline to gain valuable insights to better meet the needs of its passengers. The option for customers to seek refunds on fare differences for wheelchair accommodations shows UAL’s commitment to inclusivity and customer-centric policies, reinforcing its dedication to accessible travel.
The company's partnership with the San Francisco 49ers is another stepping stone toward sustainability, as the airline aims to achieve net-zero greenhouse gas emissions by 2050 and has already purchased more sustainable fuel than any other U.S. airline in 2023. This collaboration marks a significant milestone, making the 49ers the first team in the National Football League to purchase sustainable aviation fuel (SAF). This alternative to conventional jet fuel can reduce greenhouse gas emissions by up to 85% over its entire lifecycle, showcasing UAL's proactive efforts to lead in environmental stewardship.
United Airlines' proactive efforts to enhance connectivity and meet rising travel demand are encouraging. The airline has introduced 12 new domestic routes linking major cities in the United States and Canada, along with nearly 200 new flights to Milwaukee and Chicago. This expansion not only benefits travelers but also bolsters the company's position in the competitive aviation market.
Shares of UAL have surged 109.1% in the past year compared with the industry’s growth of 64.9% in the same period.
Image Source: Zacks Investment Research
UAL: Key Risks to Watch
High operating expenses are hurting the company’s bottom line. This elevation in expenses has been primarily driven by increased labor costs. In the third quarter of 2024, operating expenses surged by 4.2% year over year.
Labor costs, comprising salaries and benefits, which represent 32.5% of total operating costs, increased by 10.4% year over year.
United Airlines exited the third quarter of 2024 with a current ratio (a measure of liquidity) of 0.79. A current ratio of less than 1 indicates that the company is likely to struggle to meet its short-term obligations. Reduced pricing power is another concern.
UAL’s Zacks Rank
UAL currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include Kirby (KEX - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
Kirby currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. KEX has an expected earnings growth rate of 46.8% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 8.7%. Shares of CHRW have risen 51.5% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26.4% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average beat is 11.8%. Shares of WAB have climbed 92.4% in the past year.