United Airlines Holdings (UAL US): Buy: Path set for positive earnings momentum

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United Airlines Holdings (UAL US): Buy: Path set for positive earnings momentum

52-WEEK PRICE (USD)than the upper end of guidance (Q3 guidance: EPS in the range of USD2.50-3.50 based

on fuel price of USD3.69/gallon which seems a bit high since fuel was at around 180.00

USD3.20/gallon in early July). This suggests upside risk rather downside risk to guidance. 127.00

UAL guided TRASM growth for 3Q and 4Q to be higher than 2Q, which was up 12% YoY,

74.00

while it also expects capacity to moderate. 07/25 01/26 07/26

Target price: 163.00

Double-digit pre-tax margin target for 2027 plausible: With capacity still to moderate High: 136.11 Low: 84.57 Current: 120.97

Source: LSEG IBES, HSBC estimates

in the second half, the supply backdrop could be supportive for high yields, as guided by

the company. The key question is whether capacity growth accelerates in 2027 in the

Achal Kumar*

case of the business environment remaining as strong as it is today. This seems unlikely Analyst, Global Transport

as airlines are returning old aircraft and operating new aircraft given the high fuel price, so HSBCLimitedSecurities and Capital Markets (India) Private

capacity growth seems unlikely to accelerate in the short term. Otherwise, UAL’s target to achalkumar@hsbc.co.in

+91 80 4555 2751

achieve double-digit PBT margins in 2027 looks plausible given that the current fares look

Harshit Mantri*, CFA

sustainable. Moreover, UAL has a strong focus on the premium segment, which is a high- Analyst, Transport & Logistics, Hospitality

margin business where demand is strong. HSBC Securities and Capital Markets (India) Private

Limited

Forecasts adjusted, TP raised to USD163.00, Buy: We adjust our forecasts as we harshit.mantri@hsbc.co.in +91 80 4550 3780