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

  • United‘s stock fell after the company said it would increase capacity on its planes, possibly opening up a price war with low-cost carriers.
  • Investors feared the move would weigh on its profit margin.
  • United reported fourth-quarter earnings that beat expectations.
  • See United Airlines’ stock price move in real time here.

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 $US580 million, or $US1.99 per share, compared to $US397 million from the same quarter last year.

It also posted adjusted earnings per share of $US1.40, ahead of Wall Street’s expectations of $US1.34 per share, according to Bloomberg data.

However, higher labour 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 $US70 per share. It was up 1.26% for the year.

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

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