Fresh out of Chapter 11 bankruptcy, United Airlines parent UAL Corp. began trading its new stock on the NASDAQ stock market today.
Under the new symbol UAUA, the shares fell sharply from their initial valuation today but their value remained more than double what the carrier had forecast, marking a successful debut. The new shares declined $4.11, or 10.3 percent, to $35.89 in afternoon activity from the $40 price established in preliminary trading earlier this week.
United’s chairman and chief executive Glenn Tilton opened the NASDAQ stock market remotely from O’Hare International Airport in Chicago this morning. UAL is based in the Chicago area and O’Hare is United’s largest hub. Its second largest hub is Denver International Airport.
“Today marks a new chapter for United, and it starts from a renewed position of strength,” according to Tilton.
United’s chief operating officer Peter McDonald plans to close trading on the NASDAQ today remotely from San Francisco International Airport, which United called its “gateway to the Pacific.”
United’s old shares were cancelled. Those shares had been delisted from trading on the New York Stock Exchange. United previously said it secured approvals from both NASDAQ and the NYSE for trading its new stock.
In its plan of reorganization, United had given an assumed reorganization value of its new stock of $15 per share, with total equity value of about $1.9 billion.
UAL reported a 2005 operating loss of $219 million, an improvement of $635 million over 2004.
Calyon Securities airline analyst Ray Neidl released a report starting coverage on the new stock with a sell rating, saying although the shares may temporarily trade up, “we believe the market will adjust to the earnings potential,” according to the report.
The report also said Calyon believes United’s management “has positioned the company to be competitive in what continues to be a “cut-throat” industry environment, both domestically and internationally.”
“While most carriers are choosing to simplify their models in order to contain unit costs, United is making the model more complex and thus more costly” by tailoring product lines to specific market demands, the report said. Examples are discount operation Ted and premium transcontinental service. “Only time will tell which strategy is superior.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or at kyamanouchi@denverpost.com .
