United Airlines (NASDAQ: UAL) extended its remarkable rally on Wednesday, with shares climbing 4.8% in the early hours of trading before slipping into the red briefly and then recovering again.
At 10:38 am, it was up by 1.67%.
Over the past 12 months, United’s stock has surged an astounding 187%, ranking as the third-best performer in the S&P 500, only behind Vistra and Palantir Technologies.
Remarkably, United has outpaced even Nvidia, which reclaimed its title as the world’s most valuable company from Apple earlier this week but whose stock has seen lesser exuberance from investors than UAL, rising by 144%.
The carrier’s success is underpinned by strong demand for international and premium travel.
As the 10 busiest days in US aviation history were recorded in 2024, the airline is capitalizing on a resurgent travel industry.
The continued recovery in corporate travel, spurred by the return of in-person meetings and office work, has also been a significant tailwind.
Invezz takes a look at the stock’s prospects:
United Airlines’ earnings and demand trends stand it in good stead
United Airlines capped off 2024 with impressive financial results, reporting fourth-quarter adjusted earnings of $3.26 per share, exceeding analyst estimates of $3.03.
Revenue for the quarter reached $14.7 billion, above the expected $14.4 billion.
The carrier also reported record operational metrics, operating an average of 4,340 flights per day and carrying nearly 174 million passengers during the year.
For the full year, the company operated the most flights and carried the most customers in its history.
“United reported an impressive set of results,” TD Cowen analyst Tom Fitzgerald said in a note. “United is navigating the higher operating cost environment well and making the right investments.”
Key growth segments included premium travel- with revenue rising by 10% year-over-year, reflecting strong demand from high-spending travellers seeking enhanced experiences.
Additionally, corporate travel was up by 7% as business activity rebounded, with more professionals resuming face-to-face meetings.
Basic economy grew by 20%, driven by leisure travellers returning to the skies, whereas cargo operations’ revenue jumped 30%, aided by the boom in air freight demand amid global supply chain challenges.
United Airlines CEO Scott Kirby said,
2024 was a strong year across the board for United as we’ve become the leading global airline and we enter 2025 with demand trends continuing to accelerate which puts us on the path to double-digit pre-tax margins.
Looking ahead to 2025, United anticipates strong demand trends in the first quarter, with domestic RASM (revenue per available seat mile) expected to show solid year-over-year growth and further improvements in international RASM.
Analysts maintain bullish outlook
Market analysts have expressed optimism about United’s outlook, citing strong financial performance and favorable industry dynamics.
Bernstein analysts reiterated their Outperform rating on United’s stock on Wednesday, maintaining a price target of $115.
They highlighted the airline’s robust earnings momentum and capacity management as key factors driving their positive stance.
Meanwhile, TD Cowen analysts raised their price target to $142, implying a potential upside of 28% from Tuesday’s close.
Although higher jet fuel prices remain a concern, analysts commended United’s revenue model for its resilience.
United has guided full-year 2025 earnings of $11.50 to $13.50 per share, aligning with Wall Street expectations of $12.78.
This guidance reflects confidence in sustained demand growth and operational efficiency.
Airline sector benefits from broader tailwinds
United’s strong performance mirrors broader trends lifting the airline sector.
The industry has benefited from a 20% drop in Brent crude oil prices, which could drive an estimated net profit of $31.5 billion across carriers in 2024.
Additionally, the Trump administration’s pro-business policies, including regulatory easing and planned tax cuts, have bolstered consumer spending and travel demand.
The resurgence in air travel has been a defining trend of the post-pandemic era.
With international travel surging and premium experiences in high demand, legacy carriers like United are well-positioned to thrive.
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