- United Airlines’ stock price has more than doubled in 2024, outperforming the competition.
- The airline takes advantage of its hub airport structure and has been smart with seating capacity.
- Strong financials and planned share buybacks have also helped.
United Airlines may be Boeing’s biggest customer, but the two companies have had wildly different years.
A quality control crisis and seven-week labor strike have led to layoffs, increased regulatory scrutiny and — perhaps most problematically — production delays.
And despite massive headwinds across the airline industry, United has outperformed most of its peers, with its stock price up 148% in 2024.
Financial analysts and industry consultants say the airline’s strong finances, share buybacks, wide network and an upcoming fleet refresh are among the reasons it has done so well.
That’s despite impacts from Boeing delivery delays, which forced United to offer pilots unpaid leave and rethink its flight this year. The airline coped by leasing aircraft and reducing its domestic supply.
Clark Johns of Alton Aviation Consultancy told Business Insider that United’s favorable hub structure and hundreds of incoming narrowbody aircraft helped position the airline to better manage the headwinds associated with Boeing.
The carrier also benefited this year by focusing on long-haul flights to boost business and revenue.
“Basic economy is still a major revenue stream for them, and they’re expanding their premium seats,” Johns said. “In some senses, they’re firing on all cylinders.”
United flies to more overseas cities than any other US carrier
Among the biggest benefits for United has been international flying.
Analysts at HSBC raised their price target for United in December to $116 – about 14% above current levels – citing its international network as a key driver.
“Its exposure to international markets is much higher than its peers and international demand is quite strong,” HSBC said, adding that United’s 2024 transatlantic winter bookings – typically a slower period – are 30% up high compared to pre-Covid levels.
Johns said United “has done a good job of timing” its capacity deployment amid delays in deliveries of new Boeing jets.
He said United had a strong performance in Europe — operating long-haul routes when demand was high, but more modestly on domestic routes when overcapacity hurt U.S. airlines’ earnings.
United has also expanded its capacity on flights to Asia. Tokyo’s Narita Airport has been a particularly key base for United, and Johns credited the airline with being “tactical” in redeploying planes there from weaker routes from its base in Guam. In 2025, it plans to expand further in the region.
United’s various hubs offer a strategic advantage
United benefits are airport hubs that create strong network opportunities across the oceans and in the Americas.
Major population centers, such as Los Angeles, San Francisco, Washington, DC, and Newark, New Jersey, act as strong international gateways.
Johns said these airports help United target high premium and business traffic.
The airline also feeds passengers through hubs in Chicago, Denver and Houston, providing good connectivity throughout the interior of the US.
In an October report from BI, Deutsche Bank analysts said they forecast 2025 to be a “strong year of regional growth” for the airline network.
Johns said Delta and American don’t have the same broad hub structure and have dominance in fewer locations, such as Dallas-Fort Worth and Charlotte for American and Atlanta and Detroit for Delta.
United is renewing its fleet with hundreds of new planes
A fleet renewal plan that includes 270 new Airbus and Boeing narrow-body aircraft, plus 150 wide-body Boeing 787 Dreamliners, is fueling United’s expansion.
Data from the manufacturers show that as of November 30 this year, United had received 21 Airbus A321neos, 31 Boeing 737 Maxs and one Dreamliner. The 737 deliveries are less than half of the 71 Max jets that United has received through November 2023.
As it shifts capacity, United has removed the yet-to-be-certified 737 Max 10 from its future fleet plan. There are 150 units on order.
United also has new planes from rival Airbus to look forward to in the coming years, including its first A321XLR in 2026.
United’s SVP of global network planning and alliances, Patrick Quayle, previously told BI that the airline plans to replace its aging Boeing 757s with A321XLRs and fly to new destinations, such as northern Italy and Africa Western.
This influx of narrow-body aircraft could help United cut costs and make the airline even more competitive.
United has installed things like Bluetooth in its new Boeing 737 Max cabins to improve the customer experience. Thomas Pallini/Business Insider
United’s fleet allows for different revenue streams, including basic economy and premium cabins to monetize; the latter is particularly lucrative as corporate travel continues to grow.
Deutsche Bank analysts said United’s adjusted pre-tax margin of 9.7% “reflects the company’s advantage of having revenue diversification with premium customers, basic economy customers and domestic route warriors.”
United’s third-quarter premium revenue, including Polaris business class and premium economy, rose 5% year over year.
Basic economy rose by a fifth, signaling that United’s discounted fare likely has drawn some business from budget carriers trying to retain customers who prefer more perks when they fly.
Stock buybacks signal strong finances
In third-quarter earnings, United’s adjusted earnings per share of $3.33 beat analysts’ estimates. It also announced plans for a $1.5 billion stock buyback.
“We expect this turnaround to be the start of a consistent and disciplined return on capital that is driven by our ability to generate increasing levels of free cash,” said CFO Michael Leskinen.
Johns told BI that this was another sign of United’s progress towards becoming a credible blue-chip stock as it works to reduce its debt-to-earnings ratio.
“I think this is probably the market that broadly sees the positives in terms of airline performance,” he said.
In a recent earnings call, United CEO Scott Kirby said the airline has been confident for the past two years that the industry is evolving to produce higher margins.
Deutsche Bank analysts are also positive, saying, “We believe the solid earnings momentum will continue over the next two years.”