UAL Stock Falls As United Airlines Misses, Airline Stocks Eye Vacation Rush

United Airlines (UAL) missed first-quarter estimates after the close today, as the airline industry tries to map out the post-pandemic landscape. UAL stock and other airline stocks were down ahead of the results.

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The carrier will report the results after rival Delta Air Lines (DAL) last week said it saw a “path to return to profitability” in the third quarter, even as business and international travel could take time to recover.

United Airlines Earnings

Estimates: Wall Street expects United to lose $6.97 per share. It expects revenue to fall 59% to $3.25 billion.

Results: Loss of $7.50 a share on revenue of $3.22 billion. Average core cash burn of $9 million per day was an improvement of about $10 million per day in Q4. March saw positive cash flow.

“We’ve shifted our focus to the next milestone on the horizon and now see a clear path to profitability,” said CEO Scott Kirby. “We’re encouraged by the strong evidence of pent-up demand for air travel and our continued ability to nimbly match it, which is why we’re as confident as ever that we’ll hit our goal to exceed 2019 adjusted EBITDA margins in 2023, if not sooner.”

United on Monday said that in July it will offer new flights to Croatia, Greece and Iceland. By focusing more on key travel markets, such as those where vaccinated travelers are welcome, United expects to return to positive net income even if business and long-haul international demand only returns to about 35% below 2019 levels.

Outlook: United sees Q2 total revenue per available seat mile to be down 20% vs. 2019 levels and capacity to be down around 45% vs. 2019.

United’s earnings conference call takes place Tuesday.

UAL Stock

Shares fell 1.7% late after closing down 1.6% at 54.99 in the stock market today, hovering just above the 50-day line.

UAL stock has a 49 Composite Rating. Its EPS Rating is a weak 9, after the coronavirus pandemic halted a large portion of travel, causing the airline industry to lose money.

Other airline stocks also slipped. Delta stock lost 1%, and was just below its 50-day line.

American Airlines (AAL) fell 2.2% to 21.55. American was in an ascending base with a 26.19 buy point. Southwest (LUV) fell 0.6%. American and Southwest report earnings on Thursday.

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Airline Stocks And Leisure Travel

With vaccinations increasing, airlines are bracing for a rush in pent-up travel demand, even as U.S. coronavirus cases still rise. Deutsche Bank analysts, in February, said the industry was “back on track” after many potential travelers saved money during lockdown.

“Thanks in part to government stimulus checks, Americans have money to spend, and it is going to things like restaurants and travel,” Cowen airline stocks analyst Helane Becker said in a research note on Friday.

However, she said that each airline is adding flights to the same areas.

“People are traveling to Florida and other coastal cities where they can go to the beach, as well as to national parks in the U.S.,” she said. “Americans are also traveling to Mexico, the Caribbean and other Latin American leisure destinations.”

United Looks To Europe

The new Europe flights announced Monday, United said, would give travelers “more options for summer travel by flying direct to countries that are starting to reopen to vaccinated visitors.” United allows passengers to upload their vaccine results via its app.

A World Health Organization emergency health committee said on Monday that it had recommended not to require proof of vaccination as a condition to travel internationally.

The committee, in making that recommendation, cited “the limited (although growing) evidence about the performance of vaccines in reducing transmission and the persistent inequity in the global vaccine distribution.”

Delta, in reporting earnings last week, said they were hoping to open flight routes between the U.S. and the UK in the summer. Management said Continental Europe was unlikely to be opened “in any meaningful way” until later in the year. Asia, it said, could take longer to reopen.

Still, Delta’s executives, during its earnings call with airline stocks analysts, fielded a question about whether it, like other parts of the travel industry, was experiencing understaffing as demand picks up.

CEO Ed Bastian said it wasn’t, even as hotels and car rental companies deal with those bottlenecks. But he said the biggest constraints it faces are related to pilot training and maintenance.

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