United Airlines: Major Warning That Wasn't
03-03-2020, 03:24 AM
#1
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United Airlines: Major Warning That Wasn't
United Airlines: Major Warning That Wasn't
https://seekingalpha.com/article/4328974-united-airlines-major-warning-wasnt?utm_source=smartnews.com&utm_medium=referral———
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Anybody following United Airlines Holdings (UAL) this week probably thinks the airline issued a major warning. The stock is now down over $30 from the highs just a few months ago, and the company issued updated guidance back on February 24. Naturally, an airline cutting 2020 guidance would only be logical in the face of the coronavirus cutting travel demand and shutting down certain Asian routes, but the statements from the airline weren't much of an actual cut to guidance.Despite the lack of a real warning from United Airlines, the airline sector has been absolutely crushed over the last few weeks. United Airlines is the domestic airline most impacted, with 40% of revenues from transcontinental flights, while Delta Air Lines(DAL) and American Airlines Group (AAL) are at 30%.
Another major reason for the lack of a warning is the impact of fuel. For 2019, United Airlines spent $9 billion on fuel costs, or over 20% of revenues. With oil collapsing and the airline not flying 5% of capacity, the fuel savings will be enormous.
03-03-2020, 03:56 AM
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Oil
Oil in $47-50 WTI/Brent range.
For an airline the size of United, a $1 drop in the price of oil = $100,000,000 in savings.
You may recall the United was profitable in 2014 with oil hovering in the $100//barrel range.
For an airline the size of United, a $1 drop in the price of oil = $100,000,000 in savings.
You may recall the United was profitable in 2014 with oil hovering in the $100//barrel range.
03-03-2020, 03:58 AM
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Zacks
https://www.zacks.com/investment-newsletter.php?arc=20200303
Stocks soared yesterday with the Dow, S&P, and Nasdaq all recording their biggest point gain ever.
Of course, for perspective, the Dow also saw their biggest point loss just last week.
For even more perspective, the largest percentage gain for the Dow dates all the way back to 3/15/1933 when it surged 15.34%, in spite of the point gain only being 8.26 points.
So while yesterday's 1,293.96 points was impressive, percentage-wise, it was 'only' 5.09%.
Nonetheless, it was still an impressive day all the way around, and one of the biggest moves in recent history.
As I said yesterday morning, last week's pullback seemed way overdone. And the monster rally that ensued proved that to be true.
So where do we go from here?
I still think there's more upside to go.
And I think that because the market had been pricing in the worst case scenario where everybody gets sick, worldwide commerce grinds to a halt, and companies make no money.
But that's just not the reality of the situation.
Stocks soared yesterday with the Dow, S&P, and Nasdaq all recording their biggest point gain ever.
Of course, for perspective, the Dow also saw their biggest point loss just last week.
For even more perspective, the largest percentage gain for the Dow dates all the way back to 3/15/1933 when it surged 15.34%, in spite of the point gain only being 8.26 points.
So while yesterday's 1,293.96 points was impressive, percentage-wise, it was 'only' 5.09%.
Nonetheless, it was still an impressive day all the way around, and one of the biggest moves in recent history.
As I said yesterday morning, last week's pullback seemed way overdone. And the monster rally that ensued proved that to be true.
So where do we go from here?
I still think there's more upside to go.
And I think that because the market had been pricing in the worst case scenario where everybody gets sick, worldwide commerce grinds to a halt, and companies make no money.
But that's just not the reality of the situation.
According to the World Health Organization (WHO), the coronavirus outbreak seems to have peaked in China, where it all began.
And Apple just last week said that their China operations were close to getting back to normal.
But the virus has not yet peaked in other parts of the world. And there's uncertainty as to how severe of an impact we will see in the U.S.
So things could get worse. And from an economic standpoint, that likelihood increases the longer travel restrictions and supply chain disruptions continue.
But so far, the economic impact has been relatively small in the U.S. And with our economy in great shape (above trend GDP, unemployment at a 50-year low, household income at a 20-year high, consumer confidence near record highs, etc.), we are in a strong position to handle it.
That was underscored by two distinctly different manufacturing reports yesterday: China's manufacturing activity plunged to its lowest level on record with a reading of 40.3, according to the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), vs. the U.S. reading of 50.7 for the PMI Manufacturing Index. (A reading above 50 shows expansion whereas a reading below 50 indicates contraction.)
China has clearly gotten pummeled, but could soon be on the upswing.
In spite of the massive disruptions to China's economy and supply chains that support companies around the world (including in the U.S.), we have fared much better.
It's still early. But the above contrast shows why stocks were grossly oversold, and why a rebound at this juncture was warranted.
In the meantime, news can move the market in this environment.
But keep your eye on the bigger picture. And at this time, it would appear that any dip in economic activity should only be transitory.
And when the worst of this outbreak is finally behind us, stocks are expected to soar as pent-up economic demand is unleashed.
See you tomorrow,e close to getting back to normal.
But the virus has not yet peaked in other parts of the world. And there's uncertainty as to how severe of an impact we will see in the U.S.
So things could get worse. And from an economic standpoint, that likelihood increases the longer travel restrictions and supply chain disruptions continue.
But so far, the economic impact has been relatively small in the U.S. And with our economy in great shape (above trend GDP, unemployment at a 50-year low, household income at a 20-year high, consumer confidence near record highs, etc.), we are in a strong position to handle it.
That was underscored by two distinctly different manufacturing reports yesterday: China's manufacturing activity plunged to its lowest level on record with a reading of 40.3, according to the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), vs. the U.S. reading of 50.7 for the PMI Manufacturing Index. (A reading above 50 shows expansion whereas a reading below 50 indicates contraction.)
China has clearly gotten pummeled, but could soon be on the upswing.
In spite of the massive disruptions to China's economy and supply chains that support companies around the world (including in the U.S.), we have fared much better.
It's still early. But the above contrast shows why stocks were grossly oversold, and why a rebound at this juncture was warranted.
In the meantime, news can move the market in this environment.
But keep your eye on the bigger picture. And at this time, it would appear that any dip in economic activity should only be transitory.
And when the worst of this outbreak is finally behind us, stocks are expected to soar as pent-up economic demand is unleashed.
See you tomorrow,
Stocks soared yesterday with the Dow, S&P, and Nasdaq all recording their biggest point gain ever.Of course, for perspective, the Dow also saw their biggest point loss just last week.
For even more perspective, the largest percentage gain for the Dow dates all the way back to 3/15/1933 when it surged 15.34%, in spite of the point gain only being 8.26 points.
So while yesterday's 1,293.96 points was impressive, percentage-wise, it was 'only' 5.09%.
Nonetheless, it was still an impressive day all the way around, and one of the biggest moves in recent history.
As I said yesterday morning, last week's pullback seemed way overdone. And the monster rally that ensued proved that to be true.
So where do we go from here?
I still think there's more upside to go.
And I think that because the market had been pricing in the worst case scenario where everybody gets sick, worldwide commerce grinds to a halt, and companies make no money.
But that's just not the reality of the situation.
Stocks soared yesterday with the Dow, S&P, and Nasdaq all recording their biggest point gain ever.Of course, for perspective, the Dow also saw their biggest point loss just last week.
For even more perspective, the largest percentage gain for the Dow dates all the way back to 3/15/1933 when it surged 15.34%, in spite of the point gain only being 8.26 points.
So while yesterday's 1,293.96 points was impressive, percentage-wise, it was 'only' 5.09%.
Nonetheless, it was still an impressive day all the way around, and one of the biggest moves in recent history.
As I said yesterday morning, last week's pullback seemed way overdone. And the monster rally that ensued proved that to be true.
So where do we go from here?
I still think there's more upside to go.
And I think that because the market had been pricing in the worst case scenario where everybody gets sick, worldwide commerce grinds to a halt, and companies make no money.
But that's just not the reality of the situation.
According to the World Health Organization (WHO), the coronavirus outbreak seems to have peaked in China, where it all began.
And Apple just last week said that their China operations were close to getting back to normal.
But the virus has not yet peaked in other parts of the world. And there's uncertainty as to how severe of an impact we will see in the U.S.
So things could get worse. And from an economic standpoint, that likelihood increases the longer travel restrictions and supply chain disruptions continue.
But so far, the economic impact has been relatively small in the U.S. And with our economy in great shape (above trend GDP, unemployment at a 50-year low, household income at a 20-year high, consumer confidence near record highs, etc.), we are in a strong position to handle it.
That was underscored by two distinctly different manufacturing reports yesterday: China's manufacturing activity plunged to its lowest level on record with a reading of 40.3, according to the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), vs. the U.S. reading of 50.7 for the PMI Manufacturing Index. (A reading above 50 shows expansion whereas a reading below 50 indicates contraction.)
China has clearly gotten pummeled, but could soon be on the upswing.
In spite of the massive disruptions to China's economy and supply chains that support companies around the world (including in the U.S.), we have fared much better.
It's still early. But the above contrast shows why stocks were grossly oversold, and why a rebound at this juncture was warranted.
In the meantime, news can move the market in this environment.
But keep your eye on the bigger picture. And at this time, it would appear that any dip in economic activity should only be transitory.
And when the worst of this outbreak is finally behind us, stocks are expected to soar as pent-up economic demand is unleashed.
See you tomorrow,e close to getting back to normal.
But the virus has not yet peaked in other parts of the world. And there's uncertainty as to how severe of an impact we will see in the U.S.
So things could get worse. And from an economic standpoint, that likelihood increases the longer travel restrictions and supply chain disruptions continue.
But so far, the economic impact has been relatively small in the U.S. And with our economy in great shape (above trend GDP, unemployment at a 50-year low, household income at a 20-year high, consumer confidence near record highs, etc.), we are in a strong position to handle it.
That was underscored by two distinctly different manufacturing reports yesterday: China's manufacturing activity plunged to its lowest level on record with a reading of 40.3, according to the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), vs. the U.S. reading of 50.7 for the PMI Manufacturing Index. (A reading above 50 shows expansion whereas a reading below 50 indicates contraction.)
China has clearly gotten pummeled, but could soon be on the upswing.
In spite of the massive disruptions to China's economy and supply chains that support companies around the world (including in the U.S.), we have fared much better.
It's still early. But the above contrast shows why stocks were grossly oversold, and why a rebound at this juncture was warranted.
In the meantime, news can move the market in this environment.
But keep your eye on the bigger picture. And at this time, it would appear that any dip in economic activity should only be transitory.
And when the worst of this outbreak is finally behind us, stocks are expected to soar as pent-up economic demand is unleashed.
See you tomorrow,
03-03-2020, 10:26 AM
#7
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Joined APC: Jun 2007
Position: 767/757 CA
Posts: 2,607
Originally Posted by AntiPeter
As of 2 p.m. eastern UAL stock is down another 4% today alone, down about 39% from the high in 2019.
03-03-2020, 11:08 AM
#8
You look like a nail
Joined APC: May 2012
Posts: 451
Or maybe the reason they haven't offered clarity in the forward-looking guidance is that nobody knows how bad it's going to be. How do you forecast a clear departure form business as usual? My guess is that by the end of the second quarter UAL will be able to offer pretty solid expectations for a the full year. Right now, (I'm guessing) they're just trying to stop the red.
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