United Airlines Holdings Inc (UAL) stock took flight on Thursday afternoon, soaring 9.13% to $59.05, hitting a fresh 52-week high. This surge was fueled by a wave of optimism sweeping through the airline industry, sparked by Southwest Airlines Co (LUV)’s announcement of a $2.5 billion stock buyback program.
Southwest’s confidence in the industry was further bolstered by its projected revenue per seat mile growth of 2% to 3%, indicating a healthy increase in air travel demand. This positive outlook serves as a beacon for other airlines, particularly United, which boasts an extensive international and domestic network and could potentially see similar revenue gains.
Adding fuel to United’s ascent was Southwest’s anticipated decrease in fuel costs. Fuel is a major expense for airlines, and if Southwest sees lower fuel prices, it could benefit United as well. Lower fuel prices could improve United’s profitability, contributing to a potential rise in its stock price.
Southwest also unveiled ambitious long-term profit goals, aiming to generate an extra $4 billion in earnings by 2027. This ambitious target could inspire similar growth targets from United, especially as the airline continues to expand its global operations.
Furthermore, Southwest’s decision to introduce assigned seating in 2026 suggests a focus on improving the customer experience, an area where United already excels. Investors may interpret this move as Southwest attempting to catch up with United’s more premium services, potentially giving United a competitive edge in attracting customers.
United’s strong performance reflects a positive sentiment in the airline industry, fueled by growing travel demand and the potential for increased profitability. With a robust network and focus on customer experience, United is well-positioned to capitalize on this positive trend.
