United's Stock Falls 2.15% Despite Fitch's BB+ Upgrade Trailing 208th in Liquidity

Market Snapshot

On December 23, 2025, United Airlines Holdings (UAL) closed with a 2.15% decline, trading on a volume of $0.37 billion, which ranked it 208th in terms of liquidity across the broader market. Despite a recent credit rating upgrade by Fitch Ratings, the stock underperformed relative to its peers, reflecting mixed investor sentiment amid ongoing capital expenditures and margin pressures.

Key Drivers

Fitch Ratings upgraded United Airlines’ Issuer Default Rating (IDR) to ‘BB+’ from ‘BB’ with a Stable outlook, citing progress in debt reduction and strategic execution. The upgrade was driven by the airline’s repayment of $1.52 billion in loyalty program debt, improved EBITDAR leverage (3.5x in Q3 2025 vs. 3.8x at year-end 2024), and stronger market positioning compared to peers. Fitch also raised unsecured ratings to ‘BB+’ and affirmed senior secured debt at ‘BBB-’, signaling confidence in United’s ability to reduce leverage to below 3x over the next 1–2 years.

The rating agency highlighted United’s liquidity position, noting net leverage metrics aligned with higher-rated Delta Air Lines and a target of adjusted net leverage below 2x by 2025. However, the upgrade was tempered by concerns over future capital spending for fleet renewal, which could constrain free cash flow (FCF) and delay further debt repayment. Fitch projects meaningful FCF in 2025 but expects it to normalize in 2026 as aircraft deliveries increase, limiting upside potential.

Separately, a class-action lawsuit alleging negligence in voluntary benefits programs named United Airlines, though the case appears unrelated to core financial performance. The lawsuit, alongside broader legal risks, could introduce reputational headwinds but has not been directly tied to operational or financial metrics affecting stock valuation.

While the credit upgrade suggests improved creditworthiness, market reaction remained cautious. United’s stock fell 2.15% despite the positive rating action, reflecting investor skepticism about its ability to sustain margin expansion amid capital-intensive fleet modernization. Fitch indicated potential for further positive rating actions if United achieves its margin targets and maintains FCF generation, but near-term challenges—including rising aircraft delivery costs—pose a key constraint.

The broader airline sector also saw mixed performance, with Southwest Airlines outperforming on a 24% year-to-date gain despite a 42% drop in profits. United’s 17% gain for 2025 lags behind Southwest’s rally, underscoring divergent market perceptions of strategic initiatives. United’s focus on debt reduction contrasts with Southwest’s shift to premium services like assigned seating, which analysts argue could drive future earnings growth.

In summary, United’s stock decline on the day reflects a balance between Fitch’s positive rating outlook and near-term capital spending risks. While the airline’s debt reduction and liquidity position are strengthening, ongoing fleet renewal costs and margin pressures remain critical factors for investors to monitor. Fitch’s conditional outlook underscores that further gains will depend on United’s ability to execute strategic goals amid evolving industry dynamics.