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United Airlines Invests in Electric Aircraft Startup
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United Airlines Invests in Electric Aircraft Startup

United Airlines’ (UAL) United Airlines Ventures (UAV) has invested in Heart Aerospace, together with Breakthrough Energy Ventures, and Mesa Airlines. The investment is part of the three companies’ push to decarbonize the air travel industry with electric aircraft.

ES-19 is the electric aircraft that Heart Aerospace is currently working on and at the heart of the investment. The electric aircraft utilizes electric motors instead of jet engines and will therefore have zero operational emissions. It is designed to operate on the same types of batteries used in electric cars but with an expected range of up to 250 miles.

United Airlines plans to bolster its fleet with 100 electric aircraft by the end of the decade once deemed operational and approved. Its strategic partner, Mesa Airlines, also plans to bolster its fleet with 100 of the ES-19 electric planes. (See United Airlines stock chart on TipRanks)

The deal with Heart Aerospace is part of United Airlines’ investment drive focused on sustainability as it looks to enhance carbon-neutral air travel. The airline plans to be greenhouse gas-free by 2050.

“We recognize that customers want even more ownership of their own carbon emissions footprint. We’re proud to partner with Mesa Air Group to bring electric aircraft to our customers earlier than any other US airliner,” said Michael Leskinen, UAV’s President.

Yesterday, Argus Research analyst John Staszak downgraded United Airlines to a Hold from a Buy. According to the analyst, the airline’s reliance on international flights is a problem in the near term.

“We think that UAL’s efforts to cut costs and upgrade its fleet bode well for future results. However, in the near term, we think that investors will prefer airlines that are less reliant on corporate and international flights and opt instead for the shares of low-cost carriers that are able to significantly reduce debt,” Staszak said.

Consensus among analysts is a Hold based on 4 Buys, 10 Holds, and 1 Sell. The average United Airlines price target of $60.77 implies 25.30% upside potential to current levels.

UAL scores a 7 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.

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