Dahlman Rose Reiterates Neutral Rating on UAL Corp. (UAUA)

Dahlman Rose & Co. just issued a research report, where it reiterated its Neutral rating on shares of UAL Corp. UAUA; this comes on the heels of the company’s better than expected earnings report. The Dahlman analysts said, “We are estimating 3Q10 revenue growth of 26%, to $5.6 billion from $4.4 billion. This is similar to the $1.2 billion increase reported in 2Q10 vs 2Q09. United is continuing to maintain strong cost control so that expenses are estimated to be up by 15%, which is less than the 21% increase reported in 2Q10. We are forecasting $3.52 for 2010 growing to $3.65 in 2011. This outlook is consistent with what we have seen from other major carriers thus far.” They added, “We continue to believe the merger with Continental Airlines will be approved by the regulatory authorities so that it will close by year-end. It is our view that the fundamental outlook is being overshadowed by the merger so that the stock will more likely trade on merger news rather than fundamentals for the next several quarters. The two airlines have responded to regulatory requests for more information in what they consider to be a timely fashion. Both airlines are hopeful of approval so they can close this deal by year-end.” The Dahlman analysts further noted, “United Airlines pilots reached a transition agreement with their counterparts at Continental Airlines providing a framework for the combined pilot operations. This is critical to the continued smooth operations of both companies when the merger is completed. There is still much work to do as the framework just outlines how they negotiate the merged contract.”