United Airlines Rises 3% On Earnings Beat, Strong Demand; Carrier Makes Huge Boeing Dreamliner Purchase

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Shares of United Airlines (UAL) reported $12.4 billion in fourth quarter revenue after market close on Tuesday. The number topped FactSet estimates of $12.2 billion. Earnings per share of $2.46 also beat FactSet estimates $2.10.

Shares were slipping ahead of earnings on Tuesday but were up over 3% after the news. The company will hold its earnings call on Wednesday at 9:30 am Central Time.

Earlier, shares made  a six-day winning streak after recovering from a failed breakout. The company is on the IBD 50 Stocks to Watch.


The stock broke out of a cup base with a 45.67 buy point in December. However that breakout failed as shares slid in the second half the month.

Shares bounced back quickly this month, and offered an alternate entry at 46.07 from a shorter-than-normal cup base. Shares are extended from that point. Strong volume supported the rising action.

Airlines stocks have been on a tear in recent sessions. Their strong price action also indicates emerging market leadership.

Fundamental, Technical Drivers For United Airlines

UAL ranks fourth in the airlines industry group, which ranks 93rd among IBD’s 197 industry groups but has been climbing in the past three months.

The stock’s Composite Rating of 87 lags its Relative Strength Rating of 92.

Its load factor, which measures the number of seats sold to passengers per plane, has been increasing. It reached 87.3 in the third quarter. A high load factor is indicative of strong revenue for airlines.

Sales of $12.9 billion rose 66% in the third quarter from the previous year and $2.81 earnings per share showed a solid rebound from a loss of $1.02 per share over the same period.

United operates hubs in Chicago, Denver, Houston, Los Angeles, New York, San Francisco and other cities. It operates flights to destinations across the Atlantic, the Pacific and Latin America.

In December, United announced plans to purchase 100 Boeing Dreamliner jets with an option of buying another 100. The new planes will replace older Boeing 767s and 777s. According to Boeing, the Dreamliner has 25% higher fuel efficiency and lower carbon emission per seat.

United expects to buy 700 narrow and widebody aircraft by 2032.

United’s Partners

In November, the airline revealed plans to invest in battery company Natron Energy. Natron’s sodium-ion batteries score high for their low emissions. United Airlines plans to use Natron’s technology to electrify its ground operations.

The Chicago, Ill.-based airline has also partnered with several companies in the energy and transportation space. Among them are NEXT Renewable Fuels, Fulcrum BioEnergy, Alder Fuels and others for driving sustainable energy consumption.

Alder Fuels seeks to replace fossil fuels with renewables. Fulcrum BioEnergy specializes in transportation fuels from land waste. NEXT Renewable Fuels creates renewable diesel that can be used as aviation fuel.

Mutual funds own 43% of United shares outstanding, while banks own 1%, according to MarketSmith. Among ETFs, the U.S. Global Jets ETF (JETS) and the Invesco Dynamic Leisure and Entertainment ETF (PEJ) own UAL stock.

Please follow VRamakrishnan @IBD_VRamakrishnan for more news on growth stocks.

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