In a business update provided on Thursday, United Airlines disclosed that it expects 4Q revenue to decline by about 67% year-over-year as COVID-19 cases are rising rapidly and impacting travel demand.
The carrier stated that in the week ended Nov. 18, there has been a deceleration in system bookings and an increase in cancellations due to the recent spike in COVID-19 cases. United Airlines (UAL) now expects scheduled capacity for 4Q to decrease “at least 55%” year-over-year, compared to the previous guidance of a decrease of “approximately 55%.”
The company still believes its average daily cash burn for 4Q will be in the range of about $15 million-$20 million, plus $10 million of average debt principal payments and severance payments per day. (See UAL stock analysis on TipRanks)
Meanwhile, on Nov. 17, Jefferies analyst Sheila Kahyaoglu initiated coverage of United Airlines with a Hold rating and a price target of $45. Kahyaoglu notes that the carrier has the oldest fleet compared to its peer group at 15.6 years, versus the average fleet age of about 10.8 years, reflecting a significant headwind. The analyst estimates that the average age of the fleet could rise to 18.3 by the end of 2023.
The Street is sidelined on United Airlines stock, with a Hold analyst consensus based on 5 Buys, 7 Holds and 2 Sells. The average price target stands at $41.78, reflecting a modest upside of 2.1% from the current levels. Shares have plunged 53.5% year-to-date.