United Airlines Stock is Looking Like a Bargain Down Here

Major airline carrier United Airlines NYSE: UAL stock has been plunging with the market sell-off despite improvement in its underlying business. The epicenter stock of the pandemic can’t seem to catch a break. Even as the reopening was accelerated by spread of COVID vaccinations, Omicron surged to negatively impact bookings. Just as spring bookings started to recover in January, Putin decides to invade Ukraine. The Russian invasion of Ukraine has hurt the airline industry directly and indirectly. While flights into and out of Russia are no longer available, it’s the rising fuel prices that are cutting in on already thin margins. As crude oil rises, airline stocks tend to fall. The rise in oil and gas prices are considered transitory in nature escalated by Russian energy sanctions. The U.S. is trying to offset the Russian oil ban with potential deals with other nations. United Airlines believes its will hit profitability in the second quarter in 2022. This was stated by its CEO in January before the Russian invasion on Feb. 24, 2022. Uncertainty is causing shares to sag. Prudent investors looking to take a calculated risk on a major airline operator can watch for opportunistic pullbacks in shares of United Airlines.

Q4 Fiscal 2021 Earnings Release

On Jan. 19, 2022, United Airlines released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an earnings-per-share (EPS) loss of (-$1.60) excluding non-recurring items versus consensus analyst estimates for a loss of (-$2.09), a $0.49 beat. Revenues grew 140.1% year-over-year (YoY) to $8.19 billion beating analyst estimates for $7.96 billion. Q4 capacity fell 21% compared to 2019. Bookings for spring remain strong despite Omicron impacting near-term demand.

Forward Guidance

United Airlines expects fiscal Q1 2022 capacity to be down 16-18% compared to Q1 2019. Operating revenues are expected to be down 20-25% compared to Q1 2019. Q1 2022 CASM-ex is expected to be up 14-15% from Q1 2019. For the fiscal full-year 2022, United Airlines expects capacity to be lower than 2019 and CASM-ex to rise 14-15% compared to 2019. However, it expects to remain on track to achieve long-term financial goals from the United Next plan. On Jan. 20, 2022, United Airlines CEO Scott Kirby commented that bookings are starting to come back and believes the Company will be profitable in Q2 2022.

Recent News and Events

On Feb. 24, 2022, Russian forces invaded Ukraine and prompted many events impacting United Airlines and the airline industry. On Feb. 28, 2022, the European Union (EU) announced that airspace will be closed to every Russian plane including private planes. Crude oil prices surged to 13-year highs above $130 per barrel in March impacting fuel prices. On March 1, 2022, The U.S. government banned Russian flights from American airspace following up on actions from the EU and Canada. On March 2, 2022, United Airlines will temporarily avoid Russian airspace impacting flights to and from India. Russian flights to the U.S. have been banned. Russia supplies most of the world’s fertilizer, therefore the ban can further impact fuel and food prices. The ripple effects continue as headlines hit on a daily basis.

UAL Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the playing field for UAL stock. The weekly rifle chart peaked at the $54.89 Fibonacci (fib) level. The weekly rifle chart breakdown has a falling 5-period moving average (MA) resistance at $42.37 overlapping the 15-period MA at $43.02. The weekly lower Bollinger Bands (BBs) sit at $33.33. The weekly stochastic bounce stalled at the 40-band with potential to cross down. The weekly market structure low (MSL) buy triggered on the breakout above $26.58 and daily MSL triggers on a breakout through $36.46. The daily rifle chart has a downtrend with a slowing 5-period MA at $33.68 and 15-period MA at $40.11 as stochastic attempts to cross up towards the 20-band. The daily lower BBs sit at $26.80. The daily 50-period MA sits at $43.71 and 200-period MA resistance at $47.13. Prudent investors can watch for opportunistic pullback levels at the $33.33 fib, $31.90 fib, $29.66 fib, $27.55, $24.44 fib, $21.34 fib, and the $17.80 fib level. Upside trajectories range from the $42.41 fib level up towards the $63.31 fib level.