United Airlines Holdings Inc UAL shares surged 9.13% to $59.05 on Thursday afternoon, reaching a fresh 52-week high. The rally in airline stocks was fueled by Southwest Airlines Co LUV unveiling a $2.5 billion stock buyback program, lifting investor sentiment across the sector.
What Else: Southwest also expects its revenue per seat mile to grow by 2% to 3%, which suggests demand for air travel is picking up. If demand for flights is rising for one major airline, it serves as a positive indicator for other companies in the industry. United, with its extensive international and domestic network, could see a similar rise in revenue.
Another factor moving United shares higher Thursday is Southwest's expectation of lower fuel costs. Fuel is a major expense for airlines, and if fuel costs drop for Southwest, it could be good news for United as well. Lower fuel prices could improve United’s profitability, leading to a potential rise in its stock price.
Other Highlights: Southwest also shared ambitious long-term profit goals, aiming for $4 billion in extra earnings by 2027. This sets a high bar, and investors might expect United to follow with strong growth targets of its own, especially since United is also expanding its operations globally.
Finally, Southwest’s plan to introduce assigned seating in 2026 shows it’s focusing more on customer experience, something United already excels at. Investors may see this as Southwest trying to catch up with United's more premium services, giving United an advantage in attracting customers.
According to data from Benzinga Pro, UAL has a 52-week high of $58.93 and a 52-week low of $33.68.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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