Can United Airlines Get Off the Ground?

Ed Ponsi

Like most companies in the travel sector, United Airlines (UAL) has had a rough year. 

When United reports earnings on Tuesday after the closing bell, a massive loss of $9.13 cents per share is expected. When you consider that United has over 290 million shares outstanding, that loss comes to around $2.65 billion. That figure doesn't take into account one-time charges related to the pandemic that could inflate that loss dramatically. 

But all is not lost. Last week, Delta Airlines, symbol DAL, reported that it lost $5.7 billion in three months, and saw a 91% drop in revenues. 

The result? Delta's stock is slightly higher now than it was before its July 14 earnings report. We could say that Delta's poor earnings report was already factored into the price of the stock. 

DAL

What does this mean for United? Well, United's chart is nearly identical to Delta's. This tells us there's a good chance that massive losses are already factored into United's stock price as well. 

United is currently supported by its 50 day moving average, shown here in blue, so any short term trades should be focused on that indicator. The stock's MACD indicator is on the verge of a buy signal, highlighted in yellow. 

UAL

Bottom line: United Airlines is about to report bad news, but don't be surprised if the stock shrugs it off. United Airlines may not be ready to take off just yet, but the worst of the turbulence caused by the Covid-19 pandemic appears to be behind it. 

Final note: United Airlines recently warned that it could lay off 36,000 employees in October. That's nearly half of United's U.S. workforce. 

However, the airline did reach an agreement with its pilots on Friday in hope to avoid involuntary job cuts. Eligible pilots can opt for an early retirement package, or work reduced hours while maintaining benefits.