United Airlines Holdings Inc (UAL) said earlier this week that its grounded fleet of 14 737 MAX jets would be moved from Houston and Los Angeles to Phoenix, Arizona for storage. The reasons behind that decision include weather issues in Houston as well as issues with construction and space in Los Angeles, United said.
United Air shares closed higher for a second consecutive trading session on NASDAQ on Thursday. It has also been the sharpest daily surge since July 16th. The stock went up 2.72% ($2.24) to $84.69, after touching an intraday high at $85.16, or a price level not seen since August 23rd ($85.65).
Shares of United Airlines Holdings Inc have risen 1.15% so far in 2019 compared with a 16.66% gain for the benchmark index, S&P 500 (SPX).
In 2018, United Air’s stock went up 24.23%, thus, it outperformed the S&P 500, which registered a 6.24% loss.
“United is fully committed to the safe movement of all our MAX aircraft and we have clearance from the FAA to conduct these ferry flights,” a spokesperson for the air carrier was quoted as saying by CNBC.
Houston is situated at a less than 60-mile distance inland from the Gulf of Mexico, while the southern part of the United States is currently in peak hurricane season.
In July, United Airlines said that its Boeing 737 MAX jets would remain off its flight schedule until November 3rd, as global grounding continues. This would result in 2 100 flights canceled in September and 2 900 cancellations in October. The move to Arizona is not likely to change those plans.
In March, Ethiopian Airlines Flight 302 crashed shortly after the jet took off in a rural region southeast of Addis Ababa, which led to the deaths of all 149 passengers and 8 crew members on board. The flight was operated on the same Boeing model, 737 MAX 8, which crashed in the Java Sea last October, killing all 189 people on board.
Currently, Boeing Co is developing a fix for the jets software, which was the cause of both incidents. Boeings Chief Executive Officer Dennis Muilenburg said this week that the plane maker is aiming to return the 737 MAX to service as soon as October.
As soon as the US Federal Aviation Administration gives the new software and pilot training a green light, air carriers will need to upload the software changes and run a series of maintenance checks on the planes.
United officials have said that once the grounding order is lifted by regulators, every 737 MAX jet will probably need 100 to 150 hours of maintenance preparation before going back in the air. Keeping all of the MAX jets in one place at Phoenix Goodyear Airport will facilitate conducting all the necessary procedures, the air carrier also said.
Analyst stock price forecast and recommendation
According to CNN Money, the 16 analysts, offering 12-month forecasts regarding United Air’s stock price, have a median target of $109.00, with a high estimate of $140.00 and a low estimate of $96.00. The median estimate represents a 28.70% upside compared to the closing price of $84.69 on August 29th.
The same media also reported that at least 13 out of 20 surveyed investment analysts had rated United Air’s stock as “Buy”, while 6 – as “Hold”.