UAL stock falls as Newark delays prompt flight cuts

Tuesday, United Airlines (NYSE:UAL) faced a significant operational challenge as persistent delays at Newark Liberty International Airport forced the carrier to reduce its daily flights. According to InvestingPro data, United Airlines maintains a strong market position with a market capitalization of over $15 billion, making it one of the largest carriers in the U.S. aviation sector. Analysts from Jefferies, caught in the disruptions, reported extensive delays at Newark, citing aged air traffic control (ATC) equipment failures and subsequent air traffic controller walk-offs as key factors. The airport, which accounts for 6% of US domestic capacity for the years 2024-2025, has been experiencing atypical delays that are expected to continue in the near term.

The situation at Newark worsened when ATC equipment issues led to a loss of radar and communication with aircraft for approximately 90 seconds. This incident resulted in about 20% of the airport’s air traffic controllers taking medical leave, exacerbating operational and staffing challenges. United Airlines CEO Scott Kirby (NYSE:KEX) has expressed that the airport will not have enough staff to handle the scheduled flight volume in the coming weeks and months.

In response to the crisis, United Airlines announced on Friday that it would cut approximately 35 daily flights from Newark, which represents about 10% of its operations from the hub. The airline, which constitutes 75% of Newark’s traffic, also offered a flight change waiver to passengers affected by the disruptions, allowing them to reschedule without fare penalties. InvestingPro analysis reveals that United Airlines has maintained relatively stable operations despite challenges, with a revenue growth of approximately 20% over the past year and healthy profit margins compared to industry peers.

The ongoing issues are further complicated by infrastructure improvements, including the closure of Newark’s 4L-22R runway, which handles nearly half of the airport’s flight activity, through June 15th. Additional closures are planned later in the year to facilitate further upgrades. The Federal Aviation Administration (FAA) is looking to hire 2,000 new air traffic controllers this year, but full staffing is not expected for another 3-4 years, according to Transportation Secretary Sean Duffy.

FlightAware data shows that since Saturday, approximately 36% of flights to and from Newark have been delayed, and 12% have been canceled. United Airlines’ decision to reduce flights reflects an effort to mitigate the impact of these delays on its operations. The airline is the only major carrier with international flights from Newark, which represents about 24% of its international capacity from the US. Other airlines, such as American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL), have significantly less exposure to Newark’s disruptions. For investors seeking deeper insights into the aviation sector’s dynamics and comprehensive analysis of these airlines, InvestingPro offers detailed Pro Research Reports covering over 1,400 stocks, including real-time metrics and expert analysis that can help inform investment decisions in this volatile sector.

In other recent news, Frontier Group Holdings (NASDAQ:ULCC) Inc. reported a net loss of $43 million for the first quarter of 2025, translating to a loss of $0.19 per share, which was significantly below the forecasted loss of $0.01 per share. The company’s revenue reached $912 million, falling short of the expected $998.06 million. Analysts at UBS have revised the price target for Frontier Group’s stock to $3.50 from $4.00 while maintaining a Neutral rating, citing a decline in Revenue per Available Seat Mile (RASM) in March. Despite these challenges, Frontier Group has introduced strategic initiatives, including a revamped loyalty program, in an effort to improve its market position.

The company anticipates a loss between $0.23 and $0.37 per share in the second quarter, though it expects to achieve profitability in the second half of the year. Frontier Group is targeting a modest increase in RASM for the second quarter, with cost per Available Seat Mile excluding fuel (CASM-ex) potentially rising by 20-25% due to recent capacity adjustments. CEO Barry Biffle emphasized the company’s commitment to providing value to customers amidst market challenges, while analysts from UBS noted that stable demand trends could help Frontier Group reach the upper end of its outlook range.

Frontier’s leadership has acknowledged the macroeconomic challenges impacting travel decisions, particularly in the leisure travel market, and is focusing on capacity adjustments to align with demand. The company is optimistic about stabilizing demand trends for May and early summer travel, supported by recent revenue and network enhancements. Despite the earnings miss, Frontier’s stock demonstrated resilience, closing 4.7% higher, reflecting investor optimism about the company’s strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.