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United Airlines Stock Declines on FAA Safety Investigation

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Key Takeaways

  • United Airlines is being investigated by the Federal Aviation Administration (FAA) following a series of safety-related incidents.
  • Officials note the probe could delay future United projects.
  • United told employees it was also concerned about recent safety issues and welcomes the FAA oversight.
  • United shares were down 4.4% in late-morning trading Monday.

Shares of United Airlines Holdings (UAL) headed lower Monday after the Federal Aviation Administration (FAA) said that it is “increasing oversight” of the carrier, which could impact some of its future operations.

In a statement to Investopedia, the FAA explained that the move was to ensure that the airline was “complying with safety regulations; identifying hazards and mitigating risk; and effectively managing safety.”

The announcement came following a series of recent incidents, including one earlier this month when a wheel came off a United flight from San Francisco to Osaka, Japan, causing it to be diverted to Los Angeles, and another a week later as one of its jetliners landed in Portland, Ore., missing a side panel.

The regulators noted that while certification activities in process could be allowed to continue, “future projects may be delayed based on findings from oversight.” Bloomberg reported the FAA had discussed temporary actions it may take with the airline’s leadership in recent days, including preventing United from adding new routes and barring it from flying paying customers on newly delivered aircraft.

In a letter to employees sent to Investopedia, Sasha Johnson, United’s Vice President, Corporate Safety, wrote that “the number of safety-related events in recent weeks have rightfully caused us to pause and evaluate whether there is anything we can and should do differently.” She added that “we welcome [the FAA’s] engagement,” and told workers United was “very open to hear from them about what they find and their perspective on things we may need to change to make us even safer.” Johnson also confirmed that the probe “will also pause a variety of certification activities for a period of time.”

Shares of United Airlines Holdings were down 4.4% to $44.42 as of 11:42 a.m. ET but up about 9% this year.

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