United Airlines To Report As Airline Stocks Face Resurgent Virus

United Airlines (UAL) reports second-quarter earnings after the close today, as the delta variant of the coronavirus threatens’ the travel industry’s rebound this year. UAL stock rose.


United Airlines Earnings

Estimates: Wall Street expects a loss of $4.01 per share, narrowing from a loss of $9.31 a share a year ago. Revenue was expected to jump 262% from a year ago to $5.335 billion.

Results: Due after the close.

Last week, Delta Air Lines (DAL) reported second-quarter results that easily beat on revenue. The carrier also reported a smaller-than-expected loss and positive cash flow. Delta also said it would add Boeing (BA) and Airbus (EADSY) jets to its fleet, citing a bounce-back in demand.

American Airlines (AAL) also gave preliminary second-quarter figures that weren’t as bad as expected. The company also said it expected positive average daily cash build for the first time since the start of the pandemic.

UAL Stock

Shares rose 4.7% in the stock market today. But UAL stock has tumbled more than 20% since early June. It has a weak 4 Composite Rating. Its EPS Rating is also 4.

Other airline stocks also moved higher. Delta rose 4.4%. American gained 5.2%. Southwest (LUV) was up 4.7%.

Tuesday’s gains for the sector marked a reversal from weeks of declines. IBD’s ratings for airline stocks, however, remain weak, after the pandemic’s shutdown of the travel industry caused the airlines to lose money.

In recent weeks, rising coronavirus cases and the spread of the more contagious delta variant of the virus have posed a bigger risk to the world’s emergence from last year’s lockdowns. Researchers have said the risk of severe illness is much lower for people who have been vaccinated.

Leisure Travel, Business Rebound

CEO Scott Kirby, at an investor meeting in June, said trends in business travel were still submerged when compared to pre-pandemic levels. But he said that business travel would begin to rebound in earnest after Labor Day.

“I don’t think it comes back fully until 2023, but I’m beyond saying I’m confident it is going to come back,” he said.

Stifel airline stocks analyst Joseph DeNardi, in a research note last week, said that even as domestic leisure travel gained momentum, the recovery in business travel would likely be slower for United. On the international front, nations have instituted travel and other restrictions. Vaccination rates worldwide have been uneven.

“We don’t expect too much to change on the business or international demand front in the next two months but the picture could become clearer post-Labor Day,” he said. “For now, United’s heavier corporate and international demand exposure remain relative headwinds.”


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