United Airlines, which beat Wall Street estimates due to strong demand, announced a $1.5 billion stock buyback plan, underscoring a seeming return to an investor focus that had diminished in the pandemic.

The move brought cheers from an analyst and condemnation from Sara Nelson, president of the Association of Flight Attendants, who drew a comparison with a hedge fund’s bid to get more involved in running Southwest Airlines. Minutes after the market opened on Wednesday, United shares were up 7%.

United’s third quarter earnings call is scheduled for10:30 a.m. ET on Wednesday.

In its earnings release on Tuesday, United said its board of directors authorized a share repurchase program for up to $1.5 billion of common stock and warrants issued to the U.S. Treasury under the CARES Act. The amount represents about 7% of the carrier’s Oct. 14 market capitalization.

“Stock buybacks are a sickness that hurts workers and consumers alike,” said Nelson and Ken Diaz, president of the United AFA chapter, in a prepared statement. “The airline industry was rid of them, but a greedhead hedge fund broke the seal in its efforts to gain control of Southwest Airlines and now United Airlines management is following their lead to manipulate the stock and cheat workers and passengers.”

Hedge fund Elliott Investment Management, which owns about 10% of Southwest stock, wants to appoint eight new directors and new management. On Tuesday, it released a podcast featuring its director nominees.

Meanwhile, Diaz and Nelson noted, “Right now 35,000 Boeing Machinists are on strike because shareholder capitalism has nearly destroyed this once great pillar of aviation.”

The 2020 CARES Act was a $2 trillion relief package intended to mitigate the impact of the pandemic. It provided $63 billion to the airline industry. A condition of loans made under the act was an agreement to not buy back stock or pay dividends for one year beyond the terms of loans it made.

United’s 25,000 flight attendants are in contract negotiations and have voted to authorize a strike. AFA had previously scheduled informal picketing for Thursday at United’s headquarters in downtown Chicago.

“The company currently has concessions on the table when no other work groups at any airline have agreed to concessions,” Diaz and Nelson said in the statement. “That money United just promised Wall Street belongs to flight attendants who worked throughout the pandemic and during this taxing recovery for all of us on the frontlines.”

In a note to employees on Wednesday, United CEO Scott Kirby wrote, “At United, our #1 priority is to invest in the business (people, aircraft and infrastructure). Our second priority is to pay down high-cost debt and strengthen the balance sheet. And only after we’ve done those two things, our third priority is shareholder returns.

“Shareholder returns are something that most leading, large, successful companies do. In fact, 485 out of 500 companies in the S&P 500 have announced some form of shareholder return. Other leading U.S. airlines including Delta, Alaska, and Southwest have either completed or announced shareholder return programs while the other airlines do not.

“Importantly, my commitment to you is that investing in our people and our business will always be my top priority even while we institute this share repurchase program,” Kirby said.

In the earnings release, Chief Financial Officer Michael Leskinen said, “In the last four years, we’ve invested $22 billion in our product and nearly $10 billion in our people. Those investments have enabled higher profits and are now contributing to growing free cash flow. We’re now in a position to add a share repurchase program as we continue to invest in and deleverage our business.”

In a note issued Wednesday following the earnings release, TD Cowen analyst Tom Fitzgerald applauded the buyback.

He wrote, “The most exciting news is the resumption of shareholder returns via a $1.5 billion repurchase program, or 7% of the current market cap. The airline’s CFO comments in the release note that the company intends to have a ‘consistent and disciplined return of capital paced by our ability to generate increased levels of free cash.’”

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