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United Airlines Q2 results beat estimates

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united airlines

Travel demand is rebounding, and even as worries of the delta variant startle investors, United Airlines posted impressive second-quarter financial results. Its CEO expects the company to become profitable again, even though he recognizes the political possibility of restrictions coming back. 

Q2 results were posted with a rise of 270.9% to a 5.5B in revenue from last year, which prompted United Airlines shares to rise 6.58%, closing Tuesday at $46.32 per share. Losses per share settled at $3.91, down from $9.31 last year and better than the expected $4.23 loss. 

The company expects to post profits, before tax, in Q3 and Q4 this year after not seeing a profit since Q4 in 2019. However, full recovery is not expected until 2023. The company has posted a purchase order of 270 jets from Boeing and Airbus. 

Analyst Joseph DeNardi recently gave the stock a Hold rating and changed expectations to $52 one year from now, down from his previous expectation of 53%. Nevertheless, this still means an upside potential of 12.26%. Although the analyst believes that the company’s efforts to revamp its domestic market and profit margins are positive, he worries that capital spending will take a toll on the company and that deleveraging will take several years. 

Other analysts agree with DeNardi that the stock remains a hold but keeps an average $60.83 price target which means an upside of more than 30% from current conditions. Despite the upside possibilities, analysts also believe United Airlines to be a risky venture due to the fact that it may be exiting the pandemic with a considerable debt load and that its three-year growth plan seems to be too costly for its current status. 

How will the airline market continue to evolve these days? Are we to expect a volatile or bullish market for leisure travel?

Find more financial news at our weekly NewsFlight.

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