United Airlines stock price pops despite $1.7 billion Q1 loss

Shares of United Airlines (NASDAQ:UAL) are trading modestly higher in premarket trading hours despite the biggest quarterly loss recorded since 2008. 

Fundamental analysis: Not as bad as expected

United reported an adjusted per-share loss of $2.57 for the quarter ending March 31, compared to Wall Street expectations of a $3.36 per-share loss. Revenue came in at $7.98 billion – in line with the market expectations – but 17% lower compared to a year ago. 

In total, the reported loss for a quarter stands at $1.7 billion, compared to a $292 million profit recorded in the same period of the last year.

“While we are still in the midst of this crisis, we will not hesitate to make difficult decisions we believe will ensure the long term success of our company,” CEO Oscar Munoz said in a statement. 

“When demand returns, we believe we’ll be positioned to bounce back strongly and quickly because of our early and aggressive efforts to fight the worst financial crisis in aviation history.”

According to United, the total liquidity stands at $9.6 billion as the airline giant expects to burn through $40 million – $45 million per day in the second quarter. On April 20, United released their preliminary quarterly results, highlighting a massive expected loss for the quarter. 

The airliner has committed to keeping its workforce unchanged until October after receiving $3.5 billion in government aid and $1.5 billion in low-interest loans, in addition to applying for a $4.5 billion federal loan. 

Still, the massive job cuts may be on the way at the end of the year if the demand for air travel doesn’t pick up in the second and third quarter. United had around 96,000 employees at the end of the last year. 

Technical analysis: Stock price struggling to stage a rebound

Shares of United closed more than 5% lower yesterday in the anticipation of the first-quarter results. After the release of Q1 results, United shares gained around 2% on better-than-expected loss, but then settled at around 0.6% gains. 

As seen in the chart above, the price action has left the symmetrical triangle formation as it moved above the upper trend line. However, there has been no power registered behind this move which signals the indecision among the buyers and sellers.

On the upside, buyers will be targeting a move to the $36.50 – $38 area, where a confluence of horizontal resistance lines is located. This zone also hosts a former multi-year low of $37.41, which tends to act as a magnet for the price action. Should the price action start to move lower from here, we can expect a test of support near the $21 handle.

The United stock price lost 67% since the beginning of the year, including a 7-year low printed in March. 

Summary

Shares of United are trading 0.6% higher in premarket trading hours after the airliner reported better-than-expected earnings for the first quarter. Still, the quarterly loss of $1.7 billion is the biggest since 2008 as the company issues a further warning that it is burning through $40 million – $45 million per day in the second quarter.