Airlines
2023 seen as ‘Goldilocks’ year for airlines, United Airlines
Flying in 2023? Expect ‘goldilocks conditions’ for air travel
The Morgan Stanley rating for United Airlines Holdings has been upgraded to overweight from equal weight, saying 2023 could be a “goldilocks” year for the airline stock.
The carrier exploiting the international recovery, the new CASMxF trajectory with the pilot contract, and a promising fleet renewal path exiting 2023 are key catalysts predicted for UAL in 2023.
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“The pandemic-related earnings recovery has stayed up with, if not outpaced, peers, and messaging has been proactive and highly confident. Most importantly, there were investor worries about a growth-at-all-costs mentality emerging from the pandemic, a long-standing bear concern, especially with UAL leading the industry in phasing out charge fees in 2020 and shocking the street with alluring aggressive long-term capacity growth plans in the United Next plan unveiled in June 2021. These concerns have not only been held thus far, but UAL appears to be on track to surpass its 2023 guiding and to meet its 2026 guide, which even the most ardent UAL bulls may have thought difficult at the time.”
With the benefits of the late pandemic recovery and the early advantages from the shift to the capacity phase of United NEXT, Morgan Stanley believes that 2023 will be UAL’s “Goldilocks” year. Although the market has acknowledged UAL’s post-pandemic show-me story because the airline company is the only one that has gained ground this year, the stock’s starting point was so low that it is reportedly still trading at an appealing valuation.
