What's Next for UAL After This Billion-Dollar Purchase?

UAL announced an agreement to increase fuel efficiency

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United Airlines Holdings, Inc. (NASDAQ:UAL) is a U.S.-based airline company. United Airlines operates approximately 4,900 flights a day to 362 airports across North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America. In 2019, the company completed more than 1.7 million flights carrying more than 162 million customers. In total, United Airlines operates approximately 790 mainline aircrafts. It also sells fuel and offers catering, ground handling, and maintenance services for third parties.

On Feb. 10, United Airlines announced that it had completed an agreement to work with electric aircraft startup company, Archer Aviation, as part of its effort to invest in new technologies that provide more fuel-efficient air travel. United Airlines placed an order for $1 billion worth of Archer’s aircrafts, with an option to order an additional $500 million worth of aircraft. United Airlines, together with Mesa Airlines, plans to acquire a fleet of up to 200 electric aircrafts.

This spending move could signal a shift for United Airlines after an awful year for the charts. In 2020, United Airlines took a hit for nearly all earnings reports, beating analyst expectations on just one occasion. Further, we saw United Airlines stock tumble to a nine-year low of $17.80, though it has since recovered 145%. However, UAL stock price is still down about 46% from its 52-week high of $82.60, and has yet to resume any kind of solid upward trajectory from the pandemic losses that occurred in 2020.

Lastly, now seems like the right time to weigh in on UAL options. The security's Schaeffer's Volatility Index (SVI) of 49% sits in the 7th percentile of all other annual readings, meaning the stock sports attractively priced premiums at the moment.

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