How to Buy United Airlines (UAL) Stock

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Contributor, Benzinga
June 28, 2021

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United Airlines transports millions of passengers to destinations all over the world each day. The company has a fleet of over 800 planes and employs more than 88,000 people worldwide.

But the path to success hasn’t always been smooth . United suffered through 1 of the most devastating bankruptcies in corporate history, and past controversies put the firm in the spotlight. The airline responded to the pandemic in unique ways, and its stock responded in kind.

Is now the time to buy United stock? Start with our guide to learn more about how to buy stock and whether United Airlines is a stock to buy right now.

United Airlines at a Glance

The company can be traced back to the 1920s. Varney Airlines, created by Walter Varney, performed the 1st 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. 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 2 United Airlines flights and crashed 1 into the South Tower of the World Trade Center. The 2nd plane crashed in rural Pennsylvania.

The tragedy suppressed air travel in the United States for some time. 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.

History of (NASDAQ: 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.

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 all-time high of $91.39 in September of 2018.

While the COVID-19 pandemic suppressed air travel to a great degree, United Airlines is closing in on a post-pandemic jet order to expand and modernize its fleet. As the airline looks to the future, it could spend up to $30 billion on Boeing 737s and Airbus 321s, increasing its narrowbody fleet. Not only will investors feel more confident in the airline, but United’s purchases could inspire action among other airlines, thus increasing future investments in the industry.

Pros of Owning UAL Stock

  • High barriers to entry in the industry. Air travel is a highly-regulated industry. 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.
  • Stock is still affordable. UAL shares remain a great bargain. Airlines have adapted to weather the change in travel due to the pandemic. Furloughs and other downsizing moves have kept United afloat.

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. Oil prices always have the potential to cut into airline profits.
  • Competitors have cheaper stocks. Other airlines like Delta and Southwest are often cheaper than United.
  • Controversial history. United Airlines went through a bankruptcy and was forced to default on pension obligations. In 2017, a doctor was forcibly beaten and removed from an overbooked United flight. A dog also died in an overhead storage bin.

How to Buy UAL Stock

You may be determined to add UAL stock to your portfolio. Follow 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.

  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.

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Check Out United Airlines Stock

United Airlines is a solid stock purchase, but you must remember that all airline stocks come with a measure of risk. An air accident or serious issue with the fleet could lead to steep declines. However, Americans are not likely to stop traveling, allowing United to continue operating a massive range of routes in both domestic and international markets.

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.

Weigh your options, find a trusted brokerage and check out United Airlines stock today.