United Airlines Reports Strong Q3 Results and $1.5B Buyback Plan
United Airlines announced impressive third-quarter revenue and earnings that surpassed Wall Street expectations, bolstering investor confidence. In a significant move, the airline revealed plans to initiate a $1.5 billion share buyback, marking its first repurchase program since before the COVID-19 pandemic.
Following the earnings report, United Airlines shares surged nearly 13% on Wednesday, reaching $72.02, the highest price since February 2020, prior to the pandemic declaration. This upward momentum extended beyond United, positively impacting the broader S&P 500 and boosting other airline stocks as well.
For the third quarter, United Airlines reported revenue of $14.84 billion, reflecting a 2.5% increase from the previous year and exceeding analyst predictions. The carrier’s net income stood at $965 million, although this represents a 15% decline compared to the same quarter last year. Adjusted earnings per share (EPS) reached $3.33, surpassing both Wall Street’s forecast of $3.17 and United’s own July estimate of $2.75 to $3.25 per share.
United’s Chief Commercial Officer Andrew Nocella highlighted that domestic unit revenue saw an uptick in August and September, attributing this positive trend to strategic reductions in flight schedules that had previously depressed fare prices. He expressed optimism about maintaining yield strength in the upcoming first quarter due to these ongoing business model adjustments.
Looking ahead, United Airlines projected adjusted earnings of $2.50 to $3.00 per share for the fourth quarter, exceeding last year’s figure of $2.00 per share and analysts’ expectations of $2.68.
In terms of capacity, United expanded by 4.1% in the third quarter, with corporate revenue increasing by 13% and premium revenue—including business class tickets—growing by 5%. Notably, sales from basic economy tickets saw a remarkable 20% rise, showcasing strong demand across various fare classes.
United’s announcement of a $1.5 billion share buyback aligns with similar moves by other airlines, including Southwest Airlines, which recently unveiled a $2.5 billion repurchase program. CEO Scott Kirby emphasized that the share repurchase strategy is part of a measured and strategic approach, assuring staff that investing in employees and business operations remains the top priority.
However, this decision has faced criticism from the airline’s flight attendants’ union, which has not yet finalized a new labor agreement with United. Sara Nelson, president of the Association of Flight Attendants-CWA, voiced her concerns, stating, “That money United just promised Wall Street belongs to Flight Attendants who worked throughout the pandemic and during this taxing recovery for all of us on the frontlines.”
United Airlines’ strong third-quarter performance and the planned share buyback reflect a company recovering from the challenges of the pandemic while navigating the complexities of labor relations. As the airline looks to strengthen its financial position and enhance shareholder value, its actions will be closely monitored by both investors and employees alike. With a robust forecast for the fourth quarter, United aims to maintain momentum as it moves toward 2025, positioning itself as a leader in the competitive airline industry.
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Sources: AirGuide Business airguide.info, bing.com, cnbc.com