How Does The Current Performance of United Airlines Stock Compare With The 2008 Recession?

UAL: United Airlines Holdings logo
United Airlines Holdings

United Airlines stock (NASDAQ: UAL) currently trades at $51 per share, more than 15% below its peak level in March 2021, and it can see higher levels over time. In contrast, Southwest Airlines stock (NYSE: LUV) is trading at $26, more than 55% below its peak level seen in April 2021. United Airlines saw its stock trading at around $35 in late June 2022, just before the Fed started increasing rates, and is now 45% above that level, compared to 40% gains for the S&P 500 during this period. The rally in the stock over recent months has been driven by a steady decline in the inflation rate in response to the Fed’s aggressive rate hike plan – although investors still have concerns about a delay in rate cuts. The notable increase in United Airlines’ revenues over recent quarters has also contributed to the stock’s recovery.

However, the increase in UAL stock has been far from consistent. Returns for the stock were 1% in 2021, -14% in 2022, and 9% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that UAL underperformed the S&P in 2021 and 2023. In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Industrials sector including GE, CAT, and RTX, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could UAL face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a strong jump? Returning to the pre-inflation shock level means that UAL stock will have to gain over 20% from here. We believe this will materialize over time and estimate United Airlines’ valuation to be around $60 per share, implying about 15% gains. This is because the company has seen a substantial rise in travel demand over the recent quarters.

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Our detailed analysis of United Airlines’ upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.

2022 Inflation Shock
Timeline of Inflation Shock So Far:

  • 2020 – early 2021: Increase in money supply to cushion the impact of lockdowns led to high demand for goods; producers unable to match up.
  • Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continue to hurt supply.
  • April 2021: Inflation rates cross 4% and increase rapidly.
  • Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process.
  • June 2022: Inflation levels peak at 9% – the highest level in 40 years. The S&P 500 index declined more than 20% from peak levels.
  • July – September 2022: Fed hikes interest rates aggressively – resulting in an initial recovery in the S&P 500 followed by another sharp decline.
  • October 2022 – July 2023: Fed continues rate hike process; improving market sentiments helps S&P500 recoup some of its losses.
  • Since August 2023: Fed has kept interest rates unchanged to quell fears of a recession, and it is prepared for rate cuts in 2024.

In contrast, here’s how UAL stock and the broader market performed during the 2007/2008 crisis.

Timeline of 2007-08 Crisis

  • 10/1/2007: Approximate pre-crisis peak in S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
  • 3/1/2009: Approximate bottoming out of S&P 500 index
  • 12/31/2009: Initial recovery to levels before accelerated decline (around 9/1/2008)

UAL and S&P 500 Performance During 2007-08 Crisis

UAL stock declined from $48 in September 2007 (pre-crisis peak) to around $5 in March 2009 (as the markets bottomed out), implying UAL stock lost nearly 90% of its pre-crisis value. It recovered post the 2008 crisis to levels of around $13 in early 2010, rising 162% between March 2009 and January 2010. The S&P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.

UAL Fundamentals Over Recent Years

UAL revenues fell sharply from $43 billion in 2019 to just $15 billion in 2020 as the Covid-19 outbreak hit the airline industry hard. Revenues improved gradually to $54 billion in 2023, with a recovery in travel demand. The company’s reported earnings decreased from $11.63 in 2019 to $(23.79) in 2020, before rising to $7.99 in 2023.

Does UAL Have A Sufficient Cash Cushion To Meet Its Obligations Through The Ongoing Inflation Shock?

United Airlines’ total debt increased from $27 billion in 2020 to $32 billion now, while its total cash increased from around $12 billion to $14 billion over the same period. The company garnered $7 billion in cash flows from operations in the last twelve months. Although the company has a high debt burden, with its cash cushion, it appears to be in a comfortable position to meet its near-term obligations.


With the Fed’s efforts to tame runaway inflation rates helping market sentiments, we believe United Airlines (UAL) stock has the potential for more gains once the fears of a potential recession are allayed. Consumers have been prioritizing travel spending over other areas, aiding sales growth for airlines at large.

While UAL stock may have more room for growth, it is helpful to see how United Airlines’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Returns May 2024
MTD [1]
YTD [1]
Total [2]
 UAL Return 3% 28% -28%
 S&P 500 Return 4% 10% 134%
 Trefis Reinforced Value Portfolio 4% 4% 641%

[1] Returns as of 5/31/2024
[2] Cumulative total returns since the end of 2016

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