United Airlines has reported higher-than-expected earnings for the third quarter. Encouraged by good numbers after a busy travel season, the airline also announced a share buyback program of $1.5 billion and estimated fourth-quarter earnings that are higher than analysts’ forecast.
Q3 revenue exceeds expectations
United Airlines
beat analysts’ predictions and performed better than expected in the third quarter. The carrier made $14.8 billion in revenue, as opposed to the $14.78 predicted by Wall Street. Similarly, its earnings per share were $3.33 adjusted vs. $3.17 as previously predicted.
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United made some operational adjustments and focused on routes that were profitable to squeeze the maximum out of the busy travel season. Its domestic unit revenue was positive year-over-year in August and September, and corporate revenues were also up 13% year-over-year in September. CEO Scott Kirby commented,
“I appreciate the entire United team coming together to take care of our customers by operating a safe and on-time airline this summer. As predicted, unproductive capacity left the market in mid-August, and we saw a clear inflection point in our revenue trends that propelled United to exceed Q3 expectations.”
During this time, United was also ranked first in on-time departure and second in on-time arrival among major US airlines for the third quarter, saw a 5.8% increase in customer check-in satisfaction, and introduced other features to enhance customer experience.
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Key numbers
United’s total operating revenue for Q3 was $14.8 billion, up 2.5% compared to third-quarter 2023. It reported pre-tax earnings of $1.3 billion, with a pre-tax margin of 8.7%. Its adjusted pre-tax earnings were $1.4 billion, with an adjusted pre-tax margin of 9.7%.
The carrier operated its busiest third quarter in terms of revenue passenger volumes in its entire history. This includes busy holiday periods such as July 4 and Labor Day. It also tweaked its network strategy and operated its most extensive schedule to Europe so far that included more flights to popular destinations such as Portugal, Spain, Italy, and Greece.
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Currently, United also operates the largest mainland China network of any carrier. In the last quarter, it brought back service between Los Angeles and Shanghai and is currently the only US carrier to serve mainland China from LAX.
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Share buyback
Encouraged by these numbers and results, United felt confident enough to announce a share buyback program of $1.5 billion, its first after the COVID-19 pandemic. The airline highlighted that it has invested $22 billion in its product and nearly $10 billion in its people in the last four years. This has allowed it to have higher profits, which are now contributing to growing free cash flow. United Airlines CFO Michael Leskinen commented,
“We’re now in a position to add a share repurchase program as we continue to invest in and deleverage our business. We are simultaneously targeting net leverage below 2x in the next few years. We intend this buyback to be the beginning of a consistent and disciplined return of capital that is paced by our ability to generate increasing levels of free cash.”