How Will United’s Equity Value Be Impacted If Crude Oil Prices Rebound To $100 Per Barrel By 2018?

by Trefis Team
+29.29%
Upside
46.73
Market
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Trefis
UAL
United Airline Holdings
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Jet fuel costs account for one-third of an airline’s total operating expenses. Due to the steep fall in crude oil prices over the last 20 months, the fuel expense of airlines throughout the globe has been reduced significantly, resulting in a notable jump in their earnings. In our base case, we anticipate crude oil prices to recover steadily to $70 per barrel by 2018. However, in case the oil prices recover sooner than expected, and average  $100 per barrel in 2018, then we expect a 60% downside to our base case price estimate for United Continental.

UAL-Q&A11-5

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for United Continental

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