A United Airlines Boeing 737-MAX 8 aircraft departs San Diego International Airport for New York on August 24, 2024.
Kevin Carter Getty Images
United Airlines said there was a start to buy back shares of $ 1.5 billion as the operator reported more earnings than expected for the busy summer travel season and forecast strong results for the last three months of the year.
Shares of United Airlines were up 13% in afternoon trading on Wednesday, leading the way S&P 500 higher. Other airline stocks also traded higher, outperforming the broader market. The airline’s shares are set to close at their highest since February 2020, before Covid-19 was declared a pandemic.
United expects to earn $2.50 to $3.00 per share in the fourth quarter, compared with $2.00 a year earlier and the $2.68 analysts polled by LSEG estimated.
Here’s what United reported for the third quarter compared to what Wall Street expected, based on average estimates compiled by LSEG:
- Earnings per share: $3.33 adjusted vs $3.17 expected
- result: $14.84 billion vs. $14.78 billion expected
The share buyback will be United’s first since before the Covid-19 pandemic. US airlines received more than $50 billion in government aid during the travel pandemic that banned buybacks and dividends, even as airlines are still struggling for financial stability.
Southwest Airlines announced a $2.5 billion share buyback program last month.
“Like other leading airlines and companies, we are embarking on a measured and strategic share repurchase program,” United CEO Scott Kirby said in a note to staff on Tuesday. “Importantly, my commitment to you is that investing in our people and our business will be our top priority even as we begin this share buyback program.”
For the third quarter, United posted revenue of $14.84 billion, up 2.5% from a year earlier and exceeding analysts’ estimates. It reported net income of $965 million, down 15% from a year ago.
United said domestic unit revenue was positive in August and September compared with a year ago as the airline cut the number of flights that cut prices.
Rates are likely to rise in 2025. “We believe the strength of Q1 returns will be possible due to significant schedule changes and business model changes that will continue to be implemented by low-margin airlines,” said United Chief Commercial Officer Andrew Nocella, earnings Wednesday . call.
United increased capacity by 4.1% in the third quarter. The operator said the company’s revenue increased by 13% in the quarter; premium revenue, including business class tickets, rose 5%; and sales of no-frills basic economy tickets are up 20%.
The airline last week announced a far-reaching expansion for next year that includes new flights to Mongolia, Senegal, Spain and Greenland in an effort to tap international travel demand.
Adjusting for one-time items, United reported earnings per share of $3.33, beating Wall Street forecasts and United’s July estimate of $2.75 to $3.25 per share.
The United flight attendants union, which has yet to reach a new labor agreement with the company slammed the airline’s decision to go ahead with the buyback.
In a statement, Sara Nelson, president of the Flight Attendant Association-CWA, which represents crew on United, Spirit, Alaska and other carriers, said: “The money that United just promised to Wall Street belongs to the Flight Attendants who worked during the pandemic and during this tax recovery for we are all on the front lines.”
