A United Airlines Boeing 737-MAX 8 aircraft departed from San Diego International Airport en route to New York on August 24, 2023, as captured in a photograph by Kevin Carter of Getty Images.
United Airlines announced on Tuesday the initiation of a $1.5 billion share buyback program, following higher-than-expected earnings reported for the summer travel season. The airline also projected robust results for the last quarter of the year. United anticipates adjusted earnings of $2.50 to $3.00 per share for the fourth quarter—an increase from $2.00 per share a year prior and exceeding the $2.68 per share estimated by analysts polled by LSEG.
The airline’s third-quarter performance surpassed Wall Street expectations, with adjusted earnings per share of $3.33 compared to the anticipated $3.17, and revenue reaching $14.84 billion versus the expected $14.78 billion. This share buyback marks United’s first since the onset of the COVID-19 pandemic, during which U.S. airlines received over $50 billion in government aid that restricted share repurchases and dividends while aiming for financial stability.
Southwest Airlines recently announced a $2.5 billion share repurchase program. United Airlines’ CEO, Scott Kirby, communicated to staff that the company is embarking on a strategic share repurchase program, emphasizing that investment in personnel and business remains the utmost priority.
During the third quarter, United reported revenue of $14.84 billion, a 2.5% increase from the previous year and surpassing analysts’ estimates. However, net income fell by 15% to $965 million from the previous year. The airline noted positive domestic unit revenue in August and September compared to the prior year as airlines reduced excess flights that had pressured fares. United increased capacity by 4.1% during the third quarter, with corporate revenue rising 13%, premium revenue climbing 5%, and sales from basic economy tickets increasing by 20%.
In response to rising international travel demand, United Airlines revealed a new expansion for the next year with flights to destinations including Mongolia, Senegal, Spain, and Greenland. Adjusted earnings per share reached $3.33, surpassing both Wall Street predictions and United’s own July forecast of $2.75 to $3.25 per share.
Airline executives are scheduled to hold a call with analysts to discuss the company’s outlook for the end of the year and into 2025. They will also likely address issues related to production challenges at Boeing, where factory operations have largely been halted due to an ongoing machinist strike exceeding one month.
