United Airlines (UAL) 3Q 2024 earnings

United Airlines said Tuesday it is initiating a $1.5 billion share buyback as the carrier reported better-than-expected earnings in the busy summer travel season and forecast strong results for the final three months of the year.

United expects to earn an adjusted dividend of $2.50 to $3.00 in the fourth quarter, compared with $2.00 a share last year and the $2.68 analysts polled by LSEG estimated.

Here’s what United reported for the third quarter compared to Wall Street expectations, based on average estimates compiled by LSEG:

• Earnings per share: $3.33 adjusted vs. $3.17 expected
• Net worth: $14.84 billion compared to $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 pandemic travel slump that prohibited share buybacks and dividends, even as the airlines were still struggling for financial stability.

Southwest Airlines announced a plan to buy back 2.5 billion shares last month.

“Like other leading airlines and companies, we are initiating a limited share repurchase program,” United CEO Scott Kirby said in a letter to employees on Tuesday. “Most importantly, my commitment to you is that investing in our people and our business will always be my top priority even as we begin this share buyback program.”

In the third quarter, United posted $14.84 billion in revenue, up 2.5% from a year ago and above analysts’ estimates. It reported revenue of $965 million, down 15% from last year.

United said domestic unit revenue was better in August and September compared to a year ago as the airline cut a number of flights to lower fares. United increased capacity by 4.1% in the third quarter. The carrier said corporate revenue increased 13% in the quarter; premium revenue, including business class tickets, increased 5%; and sales from its basic economy tickets increased by 20%.

The airline last week unveiled a long-haul expansion for next year that includes new flights to Mongolia, Senegal, Spain and Greenland in a bid to boost 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.

Airline executives will hold a call with analysts at 10:30 a.m. ET Wednesday and will address questions about year-end demand through 2025, as well as production issues Boeingwhen many factories are not working during a machinist’s strike for more than a month.

United’s flight attendant union, which has yet to reach a new labor agreement with the company, has criticized the airline’s decision to repurchase.

In a statement, Sara Nelson, president of the Association of Flight Attendants-CWA, which represents workers at United, Spirit, Alaska and other carriers, said: “That money United just promised Wall Street is for the flight attendants who are working throughout this pandemic and . in this taxing time for all of us to go forward.”