Amid a spike in coronavirus cases, United Airlines Holdings Inc (UAL Quick QuoteUAL - Free Report) anticipates total revenues to weaken and cash burn to worsen in the fourth quarter of 2020 compared with its previous expectation.

In a SEC filing, the airline revealed that for the last month, ended Dec 10, 2020, it has experienced “continued deceleration in forward bookings as a result of the spike in COVID-19 cases and travel restrictions.” Consequently, the carrier expects total revenues to decline close to 70% year over year in the fourth quarter, compared with its previous estimate of a decrease of approximately 67%.

Additionally, United Airlines predicts average daily cash burn to be approximately $24 million-$26 million in the fourth quarter as opposed to $15 million-$20 million anticipated previously. Moreover, as a result of deceleration in bookings and change in working capital, the carrier estimates $10 million of average debt principal payments and severance payments per day in the same period.

United Airlines Holdings Inc Price

United Airlines Holdings Inc price | United Airlines Holdings Inc Quote

Amid this bleak scenario, recent positive news on vaccine developments offers a ray of hope to the airline. The carrier stated that current bookings for the third quarter of 2021 are down approximately 40% compared with a decline of approximately 70% for December 2020 and January 2021 travel, thanks to upbeat updates on vaccine candidates developed by various companies. The airline is confident about a recovery in travel demand in 2021 and beyond.

Zacks Rank & Key Picks

United Airlines carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are Landstar System, Inc. (LSTR Quick QuoteLSTR - Free Report) , United Parcel Service, Inc. (UPS Quick QuoteUPS - Free Report) and GATX Corp. (GATX Quick QuoteGATX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Landstar, UPS and GATX have gained more than 26%, 59% and 37% in the last six months, respectively.

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