GogglesPisano
Pawn, in game of life
- Joined
- Oct 20, 2003
- Posts
- 3,939
Then again, this article makes no mention of merger talks.
The last sentence is truly comical. Must have been written by D'Angelo.
UAL Shares Jump on Upgrade
Friday June 16, 12:12 pm ET
United Airlines' Parent Soars After Upgrade, As Airlines Overall Again Make Gains
NEW YORK (AP) -- Shares of United Airlines' parent company soared Friday after an analyst upgraded its stock, saying it looks attractively valued compared with its peers, though for only a limited window.
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UAL Corp.'s stock rose $1.35, or over 4 percent, to $31.77 in afternoon trading on the Nasdaq. Shares of the Elk Grove Township, Ill.-based company have ranged between $26.02 and $43 since its stock began trading in February, after its emergence from Chapter 11 bankruptcy protection.
Airline shares overall have been rising the past few days. The Amex Airline Index rose about 2 percent Friday, as oil prices softened, against the tide of the overall market.
Analysts are becoming more bullish about airlines' revenue prospects. For years, airlines complained of too much capacity, or too many available seats, in the market. The excess capacity meant carriers had been unable to make fare increases stick.
But several recent airline bankruptcies mean capacity has come out of the system. With that, airlines have been able to boost fares and revenue enough to offset rising fuel costs, analysts say.
Delta Air Lines Inc., which is operating in Chapter 11 bankruptcy protection, this week hiked one-way domestic fares on unrestricted first-class and walk-up coach tickets by $50, a move quickly matched competitors.
United is even more aggressive than most of its competitors; it's willing to take on higher costs to attract fliers willing to pay a premium for more services.
Such a strategy leaves it vulnerable to more volatile earnings -- bigger profits when the economy is humming, but sharper pain amid a weakened economy, said Bear Stearns analyst David Strine.
That may be why UAL shares are down about 24 percent since its Chapter 11 emergence, compared with a 5 percent decline in the Amex Airline Index.
That relative weakness pushed Strine to upgrade UAL to "Outperform" from "Peer Perform," setting a $40 price target in a research report.
Strong cash flow should drive the share price, he wrote. The airline should also benefit from its past financial losses, as it can use them to reduce its future income taxes. The carrier also could try to sell its frequent-flyer program, which the analyst estimates is worth multiple billions of dollars.
But Strine also urged investors to jump in quickly. Airlines, he said, have rarely made good long-term investments.
United's cash flow, while seemingly potent now, will likely decline over the next 18 months as it makes big airplane orders.
"There is no change to our view that the airline industry is not run for the benefit of shareholders -- it seems to have been most often run for market share gains and powerful unions," he said.
The last sentence is truly comical. Must have been written by D'Angelo.
UAL Shares Jump on Upgrade
Friday June 16, 12:12 pm ET
United Airlines' Parent Soars After Upgrade, As Airlines Overall Again Make Gains
NEW YORK (AP) -- Shares of United Airlines' parent company soared Friday after an analyst upgraded its stock, saying it looks attractively valued compared with its peers, though for only a limited window.
ADVERTISEMENT
UAL Corp.'s stock rose $1.35, or over 4 percent, to $31.77 in afternoon trading on the Nasdaq. Shares of the Elk Grove Township, Ill.-based company have ranged between $26.02 and $43 since its stock began trading in February, after its emergence from Chapter 11 bankruptcy protection.
Airline shares overall have been rising the past few days. The Amex Airline Index rose about 2 percent Friday, as oil prices softened, against the tide of the overall market.
Analysts are becoming more bullish about airlines' revenue prospects. For years, airlines complained of too much capacity, or too many available seats, in the market. The excess capacity meant carriers had been unable to make fare increases stick.
But several recent airline bankruptcies mean capacity has come out of the system. With that, airlines have been able to boost fares and revenue enough to offset rising fuel costs, analysts say.
Delta Air Lines Inc., which is operating in Chapter 11 bankruptcy protection, this week hiked one-way domestic fares on unrestricted first-class and walk-up coach tickets by $50, a move quickly matched competitors.
United is even more aggressive than most of its competitors; it's willing to take on higher costs to attract fliers willing to pay a premium for more services.
Such a strategy leaves it vulnerable to more volatile earnings -- bigger profits when the economy is humming, but sharper pain amid a weakened economy, said Bear Stearns analyst David Strine.
That may be why UAL shares are down about 24 percent since its Chapter 11 emergence, compared with a 5 percent decline in the Amex Airline Index.
That relative weakness pushed Strine to upgrade UAL to "Outperform" from "Peer Perform," setting a $40 price target in a research report.
Strong cash flow should drive the share price, he wrote. The airline should also benefit from its past financial losses, as it can use them to reduce its future income taxes. The carrier also could try to sell its frequent-flyer program, which the analyst estimates is worth multiple billions of dollars.
But Strine also urged investors to jump in quickly. Airlines, he said, have rarely made good long-term investments.
United's cash flow, while seemingly potent now, will likely decline over the next 18 months as it makes big airplane orders.
"There is no change to our view that the airline industry is not run for the benefit of shareholders -- it seems to have been most often run for market share gains and powerful unions," he said.
