Is United Airlines (UAL) a Buy Ahead of 2026? Strategic Momentum and Valuation Appeal in a Recovering Sector

The airline industry is navigating a pivotal phase of recovery, with demand rebounding post-pandemic and carriers recalibrating their strategies to capitalize on long-term growth. United Airlines (UAL) has emerged as a standout player in this landscape, combining disciplined operational improvements with aggressive fleet modernization and route expansion. For investors evaluating the stock ahead of 2026, the question is whether UAL's valuation and strategic momentum justify a "buy" recommendation.

Valuation: A Discount to Industry Averages

UAL's current valuation metrics suggest it is trading at a discount relative to its peers. As of November 2025, the airline has a price-to-earnings (P/E) ratio of 8.7x, based on the latest twelve months of earnings. This is significantly below the U.S. airline industry's average P/E ratio of 10.3x to 10.8x as of late 2025. For context, American Airlines (AAL) trades at a premium P/E of 15.47x according to recent analysis, highlighting UAL's relative affordability.

The enterprise value-to-EBITDA (EV/EBITDA) ratio further underscores UAL's undervaluation. At 5.7x according to analysis, UAL's multiple is well below the 7.25x average for the broader "Air Transport" sector as of January 2025. Notably, 80.95% of companies in the airline industry trade at a higher EV/EBITDA ratio, suggesting UAL is among the most attractively priced names in its sector. While the P/B ratio remains undisclosed in the sources, the combination of low P/E and EV/EBITDA metrics indicates UAL is trading at a meaningful discount to its intrinsic value.

Strategic Momentum: Fleet Modernization and Route Expansion

UAL's valuation appeal is amplified by its strategic initiatives, which position the airline for sustained growth in a recovering sector. Central to its strategy is fleet modernization. Under its "United Next" plan, UAL is retiring older, less efficient aircraft and acquiring over 70 new planes in 2025, including Boeing 787 Dreamliners and 737 MAX jets. These upgrades reduce fuel consumption and maintenance costs while enhancing the customer experience with features like Bluetooth-enabled seatback screens and high-speed Wi-Fi via Starlink.

Simultaneously, UAL is expanding its global footprint. In 2025, the airline launched 17 new international routes, including flights to underserved destinations like Madeira, Bilbao, and Adelaide. These routes are supported by smaller aircraft, enabling UAL to access markets with lower demand that cannot sustain larger planes. With 800 daily international departures to 147 global destinations, UAL is reinforcing its position as a dominant international carrier.

Cost-cutting measures further bolster UAL's momentum. By leveraging newer aircraft, the airline has reduced fuel and maintenance expenses, while technology-driven improvements in scheduling and turnaround times have enhanced operational efficiency. These efforts have translated into strong financial performance, including an 8.2% pre-tax margin in Q3 2025, outpacing many peers.

Capital Allocation and Long-Term Positioning

UAL's disciplined approach to capital allocation is another key strength. The airline balances reinvestment in its business-such as fleet upgrades and route expansions-with shareholder returns, ensuring flexibility to navigate potential downturns or pursue strategic opportunities. This prudence is critical in an industry prone to volatility, as it allows UAL to maintain financial resilience while investing in long-term growth.

Conclusion: A Buy Ahead of 2026?

United Airlines is trading at a compelling valuation relative to its peers, with a P/E and EV/EBITDA ratio that suggest undervaluation. More importantly, its strategic initiatives-fleet modernization, route expansion, and cost-cutting-position it to outperform in a recovering sector. As the airline industry continues to rebound, UAL's disciplined execution and focus on premium revenue streams make it an attractive candidate for investors seeking exposure to the sector. With its valuation metrics and strategic momentum aligned, UAL appears well-positioned to deliver strong returns ahead of 2026.