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How To Buy United Airlines Stock

United Airlines is one of the three largest airlines in the world, transporting millions of passengers each day to destinations all over the world. The company has a fleet of over 750 planes and employs more than 86,000 people worldwide. But the path to success hasn’t always been a smooth one.

United suffered through one of the most devastating bankruptcies in corporate history and recent controversies have put the firm and CEO Oscar Munoz in the spotlight. The stock has recently traded near all-time high levels, but can it continue to flourish despite the company’s sour reputation?

United Airlines at a glance

The company’s first iteration can be traced back to the 1920s. Varney Airlines, created by Walter Varney, performed the first scheduled mail service flight in 1926 and caught the attention of aviation pioneer William Boeing. Boeing wanted to merge several different regional airlines into a corporation and in 1930, he got his wish. Varney Airlines was combined with several other companies to form the United Aircraft and Transport Corporation (UATC), with the United Airlines subsidiary serving commercial flying. Over the next few decades, United would add many new planes and routes to its services.

In the 1980s, the company continued to expand with its acquisition of Pan American’s Pacific, Latin American and Caribbean routes, but trouble boiled under the surface. Workers were not happy and in 1994, United made a groundbreaking change. Pilots, baggage handlers and other full-time employees (minus flight attendants) agreed to purchase 55% of the company in an Employee Stock Ownership Plan (ESOP). At the time, this move made United the largest employee-owned company in the world.

On September 11, 2001, terrorists hijacked two United Airlines flights and crashed one into the South Tower of the World Trade Center (the second plane crashed in rural Pennsylvania). The tragedy suppressed air travel in the United States and when the dot-com bubble exploded shortly after, United Airlines faced mounting debts with declining revenue.

In December 2002, the company filed for bankruptcy and canceled the then-worthless Employee Stock Ownership Program. The company also canceled its pension plan, the largest corporate default in history. After years of negotiations, the company exited bankruptcy in 2006. United quickly recovered some of its lost territory and even announced plans to expand again. Today, the company has regained its status as the third largest airline in the world.

History of UAL Stock

United Airlines trades under UAL, which is the ticker for the United-Continental Holding company. UAL owns 100% of United Airlines, along with other companies like Four Star Insurance and Four Star Travel. UAL began trading on February 10, 2006, shortly after United Airlines emerged from Chapter 11 bankruptcy proceedings. The stock traded in the $25 to $45 range for most of 2006 and 2007, but then declined during the following year as the Great Recession took hold.

A history of UAL stock. Source: Google.com
A history of UAL stock. Source: Google.com

On July 14, 2008, UAL’s share price dropped to an all-time low of $2.80. The recession combined with skyrocketing fuel prices left the company with operating losses, despite a profitable 2007. Like many firms, 2008 and 2009 were lost years for United, but the company started regaining passengers in 2010 and the share price finally overtook the $25 mark in September.

Warren Buffett took a liking to airline stocks in 2016 following a steep drop in oil prices and shares of UAL rallied after Buffett announced his positions. The stock reached its current all-time high of $91.39 in September of 2018.

Pros of owning UAL stock

High barriers to entry in the industry

Air travel is a highly regulated industry and most flights are run by giants like Delta, United, and American Airlines. There’s a limited amount of space in the air and the federal government doesn’t allow new airlines to just spring up and start taking passengers. So United isn’t likely to be threatened by innovative upstarts anytime soon.

Improving economy means more travel

Unemployment levels are hitting historic lows and Americans have more disposable income than ever since the Great Recession. When Americans have extra cash, they use it to travel. Family vacations to foreign destinations are terrific for United’s bottom line.

Stock is still cheap

Despite a recent all-time high, UAL shares remain a great bargain. The P/E ratio is only 11.87 and recent earnings have been on par with analyst estimates. In 2018 Q2, the company reported over $39 billion in revenue, its highest quarterly figure ever.

Cons of owning UAL stock

Dependent on oil prices

Because of the tremendous amounts of fuel used by passenger airplanes, airline company profits always fluctuate based on oil prices. After a steady decline in 2015 and 2016, oil prices have begun to rise again, which could cut into airline profits.

Competitors have cheaper stocks

UAL shares have a great P/E ratio of 11.87, but other airlines like Delta (10.82) and Southwest (9.99) are even cheaper.

Controversial history

United Airlines is only 12 years removed from a horrible bankruptcy process in which it was forced to default on its pension obligations. The company has recently been plagued by controversy as well. In 2017, a doctor was forcibly beaten and removed from an overbooked United flight and a dog died in an overhead storage bin.

How to buy UAL stock

Ready to add United Airlines stock to your portfolio? If so, follow these steps to complete the purchase.

1. Determine how much you want to invest

Before buying any stock in United Airlines, you need to figure out how much you want to buy. Judge your own risk tolerance and decide how much of your portfolio you want devoted to UAL shares.

2. Locate shares on your brokerage account

United Airlines stock can be purchased on any major brokerage account. Choose a brokerage from our list from Benzinga’s 2018 Best Online Brokerages for Stock Trading if you don’t have one already. Here’s a short list of our favorites. 

Broker Best For Commissions Account Minimum Choose your platform
Ally Investment
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks
$4.95 volume discount available $0
Get started securely through Ally Investment's website
1 Minute Review

If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.

  • Volume discounts available
  • Among the lowest fees in industry
  • Good for every experience level
  • Excellent customer service
  • No commission free ETFs
  • Lacks physical locations
Current Promotion

$3.95 per stock trade for Active Traders at Ally Invest

TD Ameritrade
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
$6.95 $0
Get started securely through TD Ameritrade's website
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

  • Superior technology
  • No account minimum balance
  • Excellent customer support
  • Premier data and news partnerships
  • Slightly higher commissions
  • Can be for more advanced users
Current Promotion

Trade commission–free for 90 days & get up to $2500

  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance
$6.95 for fewer than 30 trades/quarter. $0
Get started securely through eTrade's website
1 Minute Review

E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. E-Trade may not have the lowest commissions compared to discount online brokers, but customers certainly get their money’s worth from E-Trade’s comprehensive offerings.

  • Extensive resources
  • Full banking services
  • Easy-to-use platforms
  • Limited access to ETrade Pro
  • Higher commissions than discount brokers
Current Promotion

60 days of commission-free trades with deposit of $10,000 or more

3. Place your order

After you’ve located the shares, type in the number you wish to purchase to execute your order. Place a market order to buy shares immediately at the market price or use a limit order to enact the trade at a specific price.

Final thoughts

United Airlines has been a great company to invest in over the last few years, but it can’t seem to steer clear of controversy. Airline stocks tend to move in lockstep and rising oil prices might have more of a say over UAL’s stock performance that any earnings report.