American air carrier United Airlines (NASDAQ:UAL) is strategizing ways to avoid the cancellations and delays in air travel witnessed last week at the Newark hub, especially for the 4th of July. As per a Wall Street Journal report, CEO Scott Kirby wrote to employees on July 1 that UAL is working with the respective authorities at the New York and New Jersey airports to open more gates for carriers to avoid long waiting hours on the taxiways as well as cancellations. Even so, one of America’s four largest carriers has decided to reduce or alter flight schedules near the hub to avoid such snarls, especially during thunderstorm season.
Storms Clouded Flight Routes
Severe storms restricted air travel around the Newark belt with the Newark Liberty International Airport, reducing the number of takeoffs by 60% to 75% for a couple of days last week. With the 4th of July approaching, United is struggling to clear the backlogs of last week and plan efficiently for the holiday. As per the flight tracking website, FlightAware on Friday, June 30, United delayed 45% of its flights and canceled another 8%. As per data from the Transportation Security Administration, roughly 2.9 million passengers passed through U.S. airports on that day. Kirby is also blaming the understaffing at the air traffic controller facility at the New York airport for the disruptions.
United is reaching out to troubled passengers from last week who were stranded at the airports overnight. As a compensation measure, the airline is offering these affected passengers 30,000 frequent flier miles. As of today, United is in a better position, with only 2% of flights delayed and only 1% of flights canceled.
Kirby went on to state that some events, like the ones that created a blockage last week, are out of the airlines’ control. However, United will try to plan a way to maneuver such situations in a better way in the future. This is the first time United Airlines has faced such massive cancellations and delays after post-COVID-19 travel demand boomed. Kirby also acknowledged that United needs to overhaul its crew scheduler technology to automatically assign new flight schedules to flight attendants and pilots in times of duress like these. He wrote, “We still have far too much manual work—that’s not acceptable.”
What is the Future of UAL?
Recently, the International Air Transport Association (IATA) predicted a significant upswing in net profits and a resurgence in passenger demand, signaling a positive trajectory for the global aviation sector in 2023. Having said that, Wall Street remains cautiously optimistic about United’s stock.
On TipRanks, United has a Moderate Buy consensus rating based on seven Buys, four Holds, and one Sell rating. Also, the average United Airlines price forecast of $62.15 implies 13.3% upside potential from current levels. Meanwhile, UAL stock has gained 47.5% year-to-date.
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