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Why United Airlines Could Be a Big Winner in 2023

United Airlines is the only major U.S. airline stock in positive territory for the year.

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U.S. airlines are enjoying a strong end to 2022 with robust holiday demand and higher fares set to keep the sector’s momentum going into the new year. 

Cowen analysts think 2023 may hold more of the same, naming
United Airlines
(ticker: UAL) as the pick of the bunch. They noted its outperformance this year and its exposure to international travel, which is set to continue to recover next year.

United stock has risen 0.3% so far in 2022 — the only major U.S. carrier in positive territory. In comparison, the NYSE Arca Global Airline Index, which tracks the performance of airlines, has fallen 17%, while the
S&P 500
has declined 14.5% as of the close of markets Thursday.

The latter part of the year has been good for the stock, which has climbed 34% since the beginning of October. 

“United has the greatest exposure to the ongoing recovery in higher-margin international travel among U.S. airlines,” Cowen analysts, led by Helane Becker, said in a note. They have an Outperform rating on the stock with a target price of $65, implying a 48% upside to Thursday’s closing price of $43.89.

The largest U.S. airlines, including United,
Delta Air Lines
American Airlines
(AAL) and
Southwest Airlines
(LUV) enjoyed bumper third-quarter revenue as business and international travel rebounded sharply. Strong leisure demand, particularly over the holiday season, has made a repeat of that success likely in the fourth quarter.

The demand picture for 2023, as a potential recession looms, is less clear. Of the three categories — leisure, business and international demand — international is perhaps the most likely to continue at pace in 2023.

United wants to make the most of that and is adding new services to Malaga, Spain, Stockholm and Dubai in the summer as well as six more flights to popular European destinations, including Paris, Rome and London. Becker pointed out that four of the five new routes United added this year were successful.

The carrier’s United Next growth plan should improve unit revenue and unit costs, she said, while reducing the carrier’s exposure to lower-yielding revenue. The plan, set out in 2021, includes increasing the number of seats on North American flights by 30% per departure and a 75% increase in premium seats by 2026. 

When it comes to the sector as a whole, industry capacity constraints should limit the downside risk linked with a softening economy and put a “higher floor” under yields, Becker said. A nationwide shortage of pilots and aircraft delivery delays have limited capacity, which, along with pent-up demand, has enabled airlines to increase fares.

“Consumers still see travel as a priority despite market conditions,” Becker noted.

The Thanksgiving travel period was a strong one for air travel, including the busiest day since 2019 on the Sunday after the holiday. More than 2.5 million people passed through U.S. airport checkpoints that day, according to Transportation Security Administration data.

The data also point toward an elongated holiday travel season, with the uptick starting the Thursday before Thanksgiving and staying strong through the Monday after. Airlines and Wall Street had predicted this, citing the emergence of flexible remote working. 

If a similar picture through the Christmas holiday materializes, the sector could be in line for a strong fourth-quarter earnings season.

Write to Callum Keown at


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