“Cheapest in History”: United Airlines Stock (NASDAQ:EADSY) Slips as Newark Becomes Cheap Fare Capital

For those seasoned travelers out there who follow airport issues, you know that Newark Liberty International Airport has been having plenty of them lately. Newark also happens to be the hub for airline stock United Airlines (UAL), and that led to an unexpected announcement from CEO Scott Kirby. That announcement may have left a little egg on United’s face, and shares slipped modestly in Friday afternoon’s trading.

Kirby called the Newark hub United’s “crown jewel,” but now, after the recent issues therein, that jewel is starting to look like a paste replica. And while in an interview with the Wall Street Journal, Kirby made it clear that the only real way to build trust in an airport again is to get people in the gates. And that, he believes, can be accomplished with dirt cheap fares.

Kirby noted that fares out of Newark are “…going to be the cheapest it’s probably ever going to be in history.” Given that a quick check online suggested a flight from Newark to London ran about $255 for coach at peak season in 1965, that suggests that perhaps “history” does not mean what Kirby thinks it means here. Naturally, Kirby found this notion distasteful, but made it clear that “…prices are lower than they otherwise would be….” thanks to the sheer number of empty seats at Newark.

Already Begun, the Business-Class Wars Have

Meanwhile, airlines across the spectrum are gearing up for the drawing of the well-heeled traveler, and United is among them. Not long ago, we heard about United’s plan for a “living room in the sky,” and it is far from alone here. Special features from sliding doors to caviar service are all on tap, reports note, as more airlines work to pull in the wealthy traveler who is interested in splurging.

With regular passengers largely sidelined in the face of economic uncertainty, such a move may be the only viable one airlines have left. And they are going all out; among United’s plan to draw interest includes not only those privacy doors, but also full suites called Polaris Studio seating as well as 27-inch 4K screens for watching movies and television on. There is no word as yet, though, on how much United will charge for that seating.

Is United Airlines a Buy, Sell or Hold?

Turning to Wall Street, analysts have a Strong Buy consensus rating on UAL stock based on 14 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 48.27% rally in its share price over the past year, the average UAL price target of $98.71 per share implies 26.71% upside potential.

See more UAL analyst ratings

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