United Airlines Holdings (UAL -14.6%) fell sharply on Monday on concerns that higher jet fuel prices will cut into Q1 profitability. Volume on UAL was over 36M shares.
“The higher fuel will more than wipe out better revenue near-term resulting in modest reductions to 1Q22 estimates,” warned MKM Partners analyst Conor Cunningham on the development.
United Airlines (NASDAQ:UAL) owns its own refinery as opposed to some peers that hedge or just buy jet fuel at spot prices. Analysts have also warned that European travel demand could be lower in the summer due to macro factors and the war headlines, which would impact UAL.
Shares of United Airlines Holdings (UAL) hit a new 52-week low of $30.87 on Monday as the Ukraine-Russia headlines and the prospect for higher jet fuel prices continued to power down expectations for a full post-pandemic recovery in the summer of 2022.
United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL) may need to consider potential equity raises to provide further liquidity cushion with oil trading over $100, according to Wolfe Research.
Wolfe is now forecasting “even bigger” EPS losses and cash burn for UAL and AAL this year with UAL burning $5.9B of cash and AAL burning $4.4B, Wolfe analyst Scott Group wrote in a note earlier.
“We lower our estimates across the board as we update our models for $100 oil prices,” Group wrote. ” Certain airlines are better positioned than others.”
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