United Airlines said Tuesday it’s embarking on a $1.5 billion share buyback because the airline reported better-than-expected profits for the busy summer travel season and forecast strong results for the ultimate three months of the yr.
United expects to post fourth-quarter adjusted earnings of $2.50 to $3.00 per share, compared with $2.00 per share a yr ago and an estimate of $2.00 per share from analysts surveyed by LSEG. $68.
Here's what United reported for the third quarter in comparison with Wall Street's expectations, based on average estimates from LSEG:
- Earnings per share: $3.33 adjusted vs. $3.17 expected
- Revenue: $14.84 billion versus expected $14.78 billion
The share buyback could be United's first since before the Covid-19 pandemic. U.S. airlines received greater than $50 billion in government aid in the course of the pandemic-related travel downturn, which banned stock buybacks and dividends, whilst airlines still struggled for financial stability.
Southwest Airlines announced a $2.5 billion share repurchase program last month.
“Like other leading airlines and companies, we are embarking on a measured, strategic share repurchase program,” United CEO Scott Kirby said in a note to employees on Tuesday. “I commit to you that investing in our people and our company will always be my top priority, even as we implement this share repurchase program.”
In the third quarter, United reported revenue of $14.84 billion, up 2.5% from a yr earlier and above analysts' estimates. The company reported net income of $965 million, down 15% from a yr earlier.
United said revenue from domestic units was positive in August and September in comparison with a yr ago as airlines reduced an oversupply of flights, leading to lower prices. United expanded capability by 4.1% within the third quarter. The airline said corporate revenue increased 13% within the quarter; Premium revenue, including business class tickets, increased 5%; and sales of basic, no-frills economy tickets increased by 20%.
Last week, the airline unveiled a sweeping expansion for next yr that features recent flights to Mongolia, Senegal, Spain and Greenland to satisfy international travel demand.
Adjusted 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.
Airline executives will hold a call with analysts at 10:30 a.m. ET on Wednesday and are more likely to ask questions on demand for the tip of the yr and into 2025, in addition to production issues Boeingwhere most factories were at a standstill during a machinists' strike that lasted greater than a month.
United's flight attendants union, which has not yet agreed to a brand new collective bargaining agreement with the corporate, criticized the airline's decision to resume buybacks.
In a press release, Sara Nelson, president of the Association of Flight Attendants-CWA, which represents crews at United, Spirit, Alaska and other airlines, said: “The money United just promised Wall Street belongs to the flight attendants who died during the “We have worked during the pandemic during this difficult recovery for all of us on the front lines.”
image credit : www.cnbc.com