We are upgrading our recommendation to Outperform on UAL Corp. (UAUA) based on the improved outlook for the airline industry. The company’s first quarter loss narrowed from the year-ago level and surpassed the Zacks Consensus Estimate, based on good capacity and revenue management as well as improving demand for business travel and premium service.
The company expects to generate higher unit revenue growth for the second quarter, driven by recovering business and international traffic and rising fares. United Airlines has made significant progress by generating industry leading unit revenue growth and operating performance.
We expect the company to benefit from industry consolidation. The company continues to strengthen its network, fleet and competitive position with the reduced cost. Moreover, United Airlines will become the world’s largest airline following its merger with Continental Airlines.Zacks Investment Research
