United Airlines SWOT – Things are looking up; favourable investor metrics and an improving operational performance

United Airlines has been through major changes during the past few years, ranging from an upheaval in C-Suite management to a domestic network overhaul. The company has also dealt with high profile customer incidents that generated negative customer sentiment, and brand damage.


Summary:

  • United Airlines has been through major changes from upheaval in C-Suite management and a domestic network overhaul as well as high profile customer incidents;
  • However, it appears to have turned a corner and has upped its share price guidance for 2018 and trimmed its capacity targets;
  • Major short short term risks are evident spurred by increases in fuel prices, macroeconomic changes and geopolitical events;
  • CAPA – Centre for Aviation has produced a United Airlines SWOT insight examining its strengths, weaknesses, opportunities and threats in detail.

Now United seems to be slowly turning a corner. It has upped its share price guidance for 2018 and trimmed its capacity targets – a combination that has pleased investors.

However, even as United welcomes some positive recognition from Wall Street, company executives also recognise short term risks spurred by increases in fuel prices, macroeconomic changes and geopolitical events. 

Despite those potential headwinds, United is declaring its EPS targets for 2020 as absolute, and they constitute part of the ‘no excuses, sir’ mentality it has adopted.  But in an industry that is exposed to such a range of external impacts, geopolitical upheaval and trade wars deliver an unknown that could affect both United and its competition.

A recent CAPA – Centre for Aviation report ‘United Airlines SWOT: positive direction after years of upheaval‘ examines United’s strengths, weaknesses, opportunities and threats in detail. Its findings include:

  • Strengths – favourable investor metrics, an improving operational performance;
  • Weaknesses – challenges in sustaining a favourable brand image, uncertainty over scope;
  • Opportunities – successfully executing its domestic strategy, instilling lasting cultural change;
  • Threats – geopolitical upheaval and trade wars, failing to meet financial targets;

The detailed insight says that although United and Continental Airlines completed their merger back in 2010, the combined company has experienced “many fits and starts in its strategy”. It notes that after battling some erosion of its brand and some pushback from the investment community over its strategy to regain domestic share, it “seems to be steadying its ship”.

“There is definitely much to be done for United to prove it is on the right course, but recent positive developments are encouraging,” acknowledges the CAPA report.