UBS Warburg Cuts UAL to 'Sell'

Analyst Sam Buttrick also widened his loss estimate and slashed his price target on the shares

UBS Warburg downgraded its investment recommendation on UAL Corp. (UAL ) to sell from buy. Analyst Sam Buttrick says the company's 2002 fundamentals are poor and the revenue environment remains weak. He says the recent fare war between AMR Corp.'s American Airlines and Northwest Airlines ended quickly last Friday with little fanfare. Buttrick says potential bankruptcy -- and associated capacity and labor cost reductions -- can form the core of an industry profit recovery, as in the early 1990's. He sees the industry as "flattish" in 2003 with a modest decline in unit cost, excluding fuel. Buttrick says not to rule out liquidation in Chapter 11 cases, as not all bankruptcy reorganizations are successful. He adds that "for every Continental, there's an Eastern." The analyst widened his $25.60 2002 loss estimate for UAL to a $28.85 loss. He cut his $20 price target to $1.50.