This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

United Airlines Gets No Respect

Stocks in this article: UAUA

Sometimes it seems as if United Airlines can't win.

First, the airline is criticized for being the only major carrier that lacks an airplane order. Then it says it will discuss potential new orders with Boeing (BA) and Airbus. As soon as that happens, it gets downgraded by JP Morgan. Shortly afterward, CEO Glenn Tilton gets added to Jim Cramer's "Wall of Shame."

To top it off, parent company UAL (UAUA) is priced around $4 and "is discounted for bankruptcy," even though the risk of that actually happening is minimal, says Jesup & Lamont analyst Helane Becker.

Becker says critics of the potential aircraft purchase should relax. United is "not even placing the orders now, and the deliveries will probably come over eight to 10 years," she says. "They are window-shopping, and this is a good time to do that."

The carrier announced its intent to seek aircraft requests for proposals on June 4. The next day, JP Morgan analyst Jamie Baker downgraded the shares to underweight from neutral.

"We view United's aircraft RFP as evidence of increasing liquidity creativity, highlighting the challenges in raising capital against older aircraft" and suggesting that the purpose for buying new aircraft is to raise financing capital from manufacturers, Baker wrote in a report.

However, he said he expects Airbus and Boeing to be skeptical and that United "may find extracting cash from either manufacturer much more difficult" than getting them to discuss new orders.

Last week, Cramer added Tilton to his "Wall of Shame," saying that United has been plagued by poor execution, plunging revenue and a decline in share value relative to its peers. This year, UAL shares are down about 63%, while the Amex Airline Index has fallen 29%. Since UAL emerged from bankruptcy in February 2006, its shares are down 88%, while the index has lost 66%.

Cramer noted that United, once the biggest airline in the world, is now fourth. Between 2000 and 2008, its fleet shrank by one-third, its workforce fell by half and its passenger count decreased by 38%.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs