United Airline Shares Drop
United Airlines parent UAL Corp.’s shares fell sharply on Monday as it disclosed plans for a $200 million stock sale. The whole airline sector was down on recession news, but UAL was down 20.5 percent, falling $2.31 to $8.94 Monday. The shares have been volatile, trading between $16.59 and $7.53 over the past month alone.
The news of UAL’s planned stock sale came after the company issued revenue guidance last week that disappointed some airline watchers. The stock offering might have surprised some people because United’s share price is so low, causing concerns about dilution of existing shares, said airline analyst Helane R. Becker at Jesup & Lamont Securities.
Credit Suisse analyst Daniel McKenzie lowered his price target on UAL to $13, down from $17. Because of UAL’s weaker revenue prediction and losses on fuel hedges, McKenzie now expects United to lose $4.30 per share for the fourth quarter, rather than the $1.15 per share loss he expected previously. He left intact his 2009 earnings prediction of $1.85 per share.
As of Monday, analysts surveyed by Thomson Reuters were expecting a UAL fourth-quarter loss of $2.86 per share, on average, and a 2009 profit of $2.59 per share. AP
Karen
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