United Airlines Holdings Inc (UAL) on Tuesday announced plans to purchase 100 19-seat ES-19 electric jets from Swedish startup company Hart Aerospace. The decision comes at a time when the air carrier seeks to shift to battery-powered aircraft for regional routes.
In a publication, United Airlines’ venture funding arm said that it would invest an undisclosed amount in Hart Aerospace along with Bill Gates’s Breakthrough Energy Ventures and Mesa Airlines.
United Air also said that the order was conditional on the aircraft satisfying its safety, business and operational requirements.
The ES-19 electric planes are expected to enter commercial service as early as 2026.
Electric jets are capable of making short urban or commuter trips only, because of the size and weight of the battery.
“With a lower cost profile you can bring back more small markets than with the higher cost of jet-fueled aircraft,” Mike Leskinen, president of United Airlines Ventures, was quoted as saying by Reuters.
“We don’t want to wait for a 50-seat, 75-seat, 125-seat plane. We want to get involved now by investing in a company that we think has a huge technological edge with the expectation of working over time to move aircraft sizes to larger gauges.”
United Air shares closed lower for a second consecutive trading session on NASDAQ on Tuesday. It has also been the steepest single-session loss since June 3rd. The stock went down 4.19% ($2.12) to $48.50, after touching an intraday low at $48.39. The latter has been a price level not seen since March 5th ($46.56).
Shares of United Airlines Holdings Inc have risen 12.14% so far in 2021 compared with a 16.32% gain for the benchmark index, S&P 500 (SPX).
In 2020, United Air’s stock went down 50.90%, thus, it again underperformed the S&P 500, which registered a 16.26% gain.
Analyst stock price forecast and recommendation
According to TipRanks, at least 10 out of 15 surveyed investment analysts had rated United Airlines Holdings Inc’s stock as “Hold”, while 4 – as “Buy”. The median price target on the stock stands at $60.77.
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