Generally speaking, it’s a good sign for the overall economy that aviation firms like United Airlines (NASDAQ:UAL) are starting to stage a comeback. The turnaround by United Airlines stock might just be in the early stages, but it could be poised for long-term success, as the travel industry is beginning to perk up.
On the other hand, the global battle to contain the novel coronavirus is far from over. Testing kits are important, no doubt, but what consumers and businesses want more than anything is a safe, widely available Covid-19 vaccine.
That’s why drug maker Pfizer (NYSE:PFE), in collaboration with Germany-based BioNTech SE (NASDAQ:BNTX), entered the limelight after the two firms announced that their Covid-19 vaccine candidate was 95% effective .
Now that Pfizer is a darling of the markets, United Airlines is seizing a prime opportunity to collaborate and assist with the logistical challenge of distributing Covid-19 vaccines, while at the same time enhancing the value of United Airlines stock.
A Closer Look at UAL Stock
It’s definitely encouraging to see United Airlines stock show some signs of life in the final two months of the year. From June through October, traders were left to wonder whether the company’s share price would move at all.
Starting in the beginning of November, the bulls were pleasantly surprised as United Airlines stock rallied from $34 to this morning’s price of $49.20.
Interestingly, that’s close to last June’s peak price. Thus, it might be said that the stock has reached a decisive point. Is a breakout imminent or will the bulls be rejected again?
For long-term investors, another rejection would sting, but it wouldn’t be the end of the road. Keep in mind that United Airlines stock started off the year close to the $90 level. Like other airline stocks, this one has room to fly if the conditions are right.
Travelers Are Coming Back
Before we delve into the Pfizer angle, it’s worth noting that the travel market could rebound on its own.
If the December holiday season ends up being anything like the pre-Thanksgiving weekend, then a recovery will take hold. From Nov. 20 through Nov. 22, a total of 3,052,139 people passed through Transportation Security Administration (TSA) checkpoints.
The Centers for Disease Control (CDC) probably wasn’t too thrilled about that. Nonetheless, it’s proof positive that people are ready and willing to board airplanes again.
Perhaps that’s because travelers are confident that a Covid-19 vaccine will be distributed to the public soon. And as it turns out, United Airlines could be a vital part of that effort.
Joining the Fight
The ongoing battle to defeat the Covid-19 pandemic consists of a concerted effort by numerous economic sectors. Airlines can help out by offering to distribute approved vaccines in a timely manner.
That’s precisely what United Airlines is preparing to do. Reportedly, the company has already begun to operate charter flights in order to get Pfizer and BioNTech SE’s Covid-19 vaccine, BNT162b2, ready for distribution.
Of course, these companies can’t provide the vaccine to the public until the U.S. Food and Drug Administration (FDA) and other regulators around the world approve it.
Still, United Airlines is practically chomping at the bit to start transporting the vaccine doses. The airline even went so far as to request permission from the Federal Aviation Administration (FAA) to carry more dry ice than would typically be allowed on flights.
It made the request because Pfizer’s vaccine must be stored at extremely low temperatures. Clearly, the only remaining hurdle is regulatory approval, and it’s conceivable that this approval will be granted sooner rather than later.
Conceivably, there are two possible ways that United Airlines stock could benefit from the company distributing the vaccine. First, the company would help get the vaccine distributed more quickly, making more consumers able to fly. Second, United Airlines could generate meaningful revenue from carrying out this role.
Either one or perhaps even both of those contributing factors could put United Airlines stock on the runway to solid gains in 2021.
The Bottom Line on United Airlines Stock
United Airlines and Pfizer/BioNTech SE are forming a potent partnership in the fight against the Covid-19 pandemic.
While awaiting regulatory approval for the vaccine’s distribution, investors can add to their positions in United Airlines stock before it (hopefully) takes off.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.