United Airlines tumbles after announcing a move that could start a price war with low-cost carriers

Shares of United fell on Wednesday morning after the airline announced plans to increase the capacity on its planes and lower fares, a move that investors fear could put pressure on its profit margin.

The action will likely open up the airliner to a price war with low-cost carriers, according to Reuters.

United’s shares were on the decline since the company reported fourth-quarter earnings on Tuesday after the market’s close. Yet it reported a strong quarter with net revenues of $580 million, or $1.99 per share, compared to $397 million from the same quarter last year.

It also posted adjusted earnings per share of $1.40, ahead of Wall Street’s expectations of $1.34 per share, according to Bloomberg data.

However, higher labor and fuel costs have also weighed on United and other airlines.

Other airline stocks are feeling pressure, such as Delta Airlines and American Airlines, which were both down 5% on Wednesday.

United’s stock was down 10.22% at $70 per share. It was up 1.26% for the year.

Read more about how airlines can hurt the stock rally’s rise.

United Airlines stock price

source
Markets Insider