United Airlines buys 270 planes – Now is the time to invest?
United Airlines has announced the purchase of 270 new Boeing and Airbus planes – the largest combined order in the airline’s history and the largest by an individual carrier in the past decade, he said in a statement.
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“The ‘United Next’ plan will have a transformational effect on the customer experience and is expected to increase the total number of seats available per domestic departure by nearly 30%, significantly reduce carbon emissions per seat and create tens of thousands of seats quality, unionized jobs by 2026, all efforts that will have a positive ripple effect on the entire US economy, ”the company said in a statement.
United’s new planes include 50 orders for 737 MAX 8s, 150 orders for 737 MAX 10s and 70 orders for A321neos. They “will come with a new signature interior that includes an entertainment system for the back of each seat, larger overhead compartments for each passenger’s carry-on luggage and the industry’s fastest in-flight Wi-Fi, as well. than a bright appearance with LED lighting. The airline plans to fly the first 737 MAX 8 with the signature interior this summer and begin flying the 737 MAX 10 and the Airbus A321neo in early 2023, ”the statement said.
United Airlines CEO Scott Kirby wrote in a Linkedin post that “the past 15 months have been the most disruptive time in our company’s history, and it has forced us to adapt like never before.” He also said the company plans to create 25,000 jobs by 2026 as a result of this growth.
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“These are union jobs at United that are paid above the federal minimum wage and come with company-sponsored medical coverage, company-funded retirement programs, paid sick leave, vacation and benefits. flight compensation, ”added Kirby.
According to the company, the new jobs will be at each of the airline’s seven major US hubs and will include Newark (EWR), with up to 5,000 jobs; San Francisco (SFO), with up to 4,000 jobs; Washington, DC (IAD), with up to 3,000 jobs; Chicago (ORD), with up to 3,000 jobs; Houston (IAH), with up to 3,000 jobs; Denver (DEN), with up to 3,000 jobs and Los Angeles (LAX), with up to 1,400 jobs.
United Airlines, which is betting on a rebound in the travel industry, received $ 4.5 billion under the Coronavirus Aid, Relief and Economic Security Act loan program (CARES Act ), according to a previous press release.
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The company “expects to generate a positive adjusted pre-tax profit in July 2021, which would be the first month with a positive adjusted pre-tax profit since January 2020, before the onset of the crisis. The COVID-19 pandemic has caused the most severe drop in travel demand in aviation history and this expected performance would mark a significant financial milestone as the company focuses on the future of United Airlines, ” according to a Securities and Exchange Commission filing.
Colin Scarola, vice president of equity research at CFRA, told GOBankingRates that “United’s new order is certainly a positive sign of how management views the recovery in global demand for air travel. But it’s important to keep in mind that the new planes on order this week won’t start arriving until 2023 and run through 2026, so the impact on inventory of this order is years away, at our opinion.
Scarola adds that CFRA’s buy rating on the stock has a lot more to do with demand over the next year which will recover faster than the market is currently anticipating.
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“And the stock being valued very cautiously. There are a lot of fears in the market right now that business and international travel will be permanently depressed even after COVID has ended around the world. We’re seeing evidence from around the world indicating that won’t be the case, however, and believe that a year from now United’s passenger numbers will be pretty close to pre-pandemic levels, if not more. This recovery will remove the fear factor from the current valuation and significantly increase the stock over the next year, in our opinion, ”adds Scarola.
The stock was up 0.6% this morning to $ 52.50.
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Last updated: June 30, 2021
This article originally appeared on GOBankingRates.com: United Airlines purchases 270 aircraft – Now is the time to invest?