Aaaand the hype is out! After the temporary increase, the stocks of US-based airlines are starting to fall down, with United leading the way. Despite better-than-expected traffic results in June, the shares of United Airlines parent company - United Continental Holdings have suffered turbulence after not-so-impressive third quarter prognosis was revealed.
After the releasing the second quarter financial results, showing a $818 million profit increase and forecast for the third quarter financial expectations, the shares of United airlines have, in fact, fallen by $4.66. This constitutes a 5.91% decrease, leaving the current worth at $74.24.
United puts the blame for the falling shares on unfortunate factors such as increasing competition in major markets like China. But the experts, however, blame the overly-cautious 3Q forecast: “What is the point of growing faster than GDP, faster than your peers, while your margins are still declining?” Evercore ISI analyst Duane Pfennigwerth told Bloomberg.
Earlier this month United Airlines released its June 2017 consolidated traffic results, showing traffic increase by 3.4% and capacity up by 5% compared to June 2016. At the same time, other US-based airlines have also released their traffic results, leading to the temporary share rise. For instance, after revealing anticipation of total revenue per available seat mile to increase between 5% and 6% - ahead of expected 3.5% and 5.5%, American Airlines Group’s shares climbed up 4.24% in premarket trade on July 12, 2017.
In July 2017 Ari Wald, head of technical analysis at Oppenheimer, called the airlines “the best stock picks at the moment” in respect to climbing American Airlines, Southwest Airlines and Delta Air Lines stocks and positive outlooks.