The shares of United Airlines (NASDAQ: UAL) have trended downward due to fears of low air travel demand in the fourth quarter. While the ongoing surge in coronavirus cases due to the delta variant is likely to cause near-term uncertainty, long-term trends look favorable for the stock. As highlighted in our earlier article, United Airlines’ 270 plane order is likely to assist in revenue and margin expansion. Interestingly, the third round of payroll support will support employee salaries through September 30, and passenger numbers at TSA checkpoints have not observed a sharp decline. Also, air travel demand surged during the second quarter as restriction measures were eased – pinning hopes for a similar trajectory after the current surge. Trefis highlights the key factors driving United Airlines’ Valuation including revenues, margins, valuation multiple, and competitive comparison with peers in an interactive dashboard analysis.
[Updated 07/13/2021] – United Airlines’ Aircraft Order To Assist Long-Term Revenue Growth
In a recent move, United Airlines (NASDAQ: UAL) announced a 270-plane order of Boeing 737 Max and Airbus A320s to replace its older regional and mainline aircraft. The new fleet will be 11% more energy efficient and lower carbon emission per seat by 15-20%. Along with better customer experience and a spacious cabin, the company is adding newer destinations and more aircraft options between various U.S. cities. Per Boeing’s commercial market outlook, the passenger air travel market is expected to grow at a single-digit rate in the next twenty years with new orders mainly driven by aircraft replacements. Apart from the earlier provided guidance of complete revenue and EBITDA recovery by 2023, United Airlines’ revenues are likely to observe strong growth post-2023 as new planes are added to the fleet. We highlight the key divisions of United Airlines’ revenues in an…