United Continental (UAL) Upgauging Should Lead to Upside - UBS

UBS analyst Myles Walton reiterated a Buy rating and $67.00 price target on United Continental (NASDAQ: UAL) after attending the company's investor event. The bulk order, is more than just an aircraft purchase, management described a plan that aligns their network, fleet and products to their hubs. The main goal is to upgauge their current fleet which includes 300+ single class regional jets with new narrowbody aircraft mainly at their hubs (200 RJ will be retired). This will allow for higher throughput on their network from already congested airports while also giving the ability to provide a more segmented product offering and thus compete more thoroughly across the spectrum.

The analyst stated "The plan calls for their average North American flight to go from 104 seats to 134 seats in 2026 which will be a big contributor to their goal of reducing CASM-ex by 8%." "COVID allowed UAL to realign costs with $2B+ of structural cost savings (at '19 ASM levels) which when combined with the fleet upgauging will drive the bulk of an expected 8% decrease in CASM-ex in '26 vs. '19 (~9.4c vs. ~10.2c). Mgmt believes their plan is conservative, includes no step function changes in other assumptions and, as a result, upside exists."

For an analyst ratings summary and ratings history on United Continental click here. For more ratings news on United Continental click here.

Shares of United Continental closed at $52.15 yesterday.

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