Why Shares of United Airlines Rose 23.7% in November

Group 1: Airline Industry Overview - The airline industry has historically struggled to generate a return on invested capital (RoIC) sufficient to cover its cost of capital [2][3] - The cyclicality of the airline industry leads to challenges, particularly during periods of overcapacity, where airlines often fail to cut route capacity despite declining demand [4] - A potential consolidation under a new administration could lead to reduced route capacity and improved profitability for airlines [5] Group 2: Impact of Trump Administration - The Trump administration is expected to adopt a less stringent approach to mergers and acquisitions in the airline industry, which could facilitate strategic objectives for individual airlines [2][5] - This more accommodating regulatory environment may allow for greater industry consolidation, potentially benefiting major airlines like United Airlines and Delta Air Lines [5][7] Group 3: United Airlines Specifics - United Airlines, recognized as one of the highest-quality and most profitable operators, is likely to benefit from the anticipated industry consolidation and improved market conditions [6] - The focus on premium travelers and successful loyalty programs has diversified revenue streams for United Airlines, reducing cyclical risks and enhancing profitability [6] - Both United Airlines and Delta Air Lines are currently reporting improving yields, indicating a positive trend in their financial performance [7]