United Airlines recently announced that it has initiated a $1.5 billion share buyback program following a period of strong earnings and anticipated robust results for the final quarter of the year. The airline expects to earn between $2.50 to $3.00 per share in the fourth quarter, a significant increase from the $2.00 per share reported a year ago. This forecast surpasses the $2.68 per share estimated by analysts.
In addition to the share buyback initiative, United Airlines reported third-quarter results that exceeded Wall Street expectations. The airline posted adjusted earnings per share of $3.33, higher than the anticipated $3.17, and generated revenue of $14.84 billion, surpassing the expected $14.78 billion. This positive performance indicates a 2.5% revenue increase from the previous year.
The decision to launch the share buyback program marks a significant move for United Airlines, as it is the first since the onset of the Covid-19 pandemic. During the pandemic-induced travel slowdown, U.S. airlines received substantial government aid amounting to over $50 billion, which restricted share repurchases and dividends. However, with the gradual recovery of the aviation industry, airlines are now looking to enhance their financial stability and invest in growth opportunities.
United Airlines’ CEO, Scott Kirby, emphasized the strategic nature of the share repurchase program, highlighting the importance of prioritizing investments in employees and business operations. Despite the buyback program, Kirby assured staff members that their well-being and the company’s growth remain top priorities.
Looking ahead, United Airlines is focusing on expanding its international routes to destinations like Mongolia, Senegal, Spain, and Greenland to meet rising travel demand. The airline reported positive domestic unit revenue in August and September compared to the previous year, indicating a gradual rebound in air travel. Additionally, United saw growth in corporate revenue by 13%, premium revenue by 5%, and sales from basic economy tickets by 20% in the third quarter.
As the airline industry continues to recover from the impact of the pandemic, United Airlines remains optimistic about future growth opportunities. The company’s upcoming earnings call with analysts is expected to provide insights into end-of-year demand trends and address concerns related to production challenges at Boeing due to ongoing labor strikes.
However, United Airlines’ decision to resume share buybacks has faced criticism from the flight attendants’ union, which argues that the funds allocated for repurchases should be directed towards frontline workers who have been instrumental in the airline’s operations during the pandemic. Sara Nelson, president of the Association of Flight Attendants-CWA, expressed disappointment over the prioritization of shareholder returns over employee welfare.
In conclusion, United Airlines’ strategic initiatives, including the share buyback program and expansion plans, reflect the company’s commitment to long-term growth and financial stability. While the decision has drawn mixed reactions, the airline remains focused on navigating the evolving aviation landscape and capitalizing on emerging opportunities in the travel sector.
