United Airlines tops Q3 estimates, announces $1.5B share buyback

United Airlines (NASDAQ:UAL ) reported third-quarter earnings that surpassed analyst expectations and announced a new $1.5 billion share repurchase program. The company's stock traded relatively flat in Wednesday's premarket.

The airline posted adjusted earnings per share of $3.33, beating the analyst consensus of $3.13. Revenue for the quarter came in at $14.84 billion, slightly above estimates of $14.77 billion and up 2.5% YoY.

United's CEO Scott Kirby (NYSE:KEX ) noted that the company saw "a clear inflection point" in revenue trends as unprofitable capacity exited the market in mid-August.

The airline reported strong demand, with corporate revenues up 13% YoY in September and premium revenues rising 5% for the quarter.

"A prosperous summer 2024 is just the beginning as our improved customer experience combined with United Next positions the airline at the top of the industry for the foreseeable future," Kirby stated.

The company's free cash flow (FCF) generation year-to-date (ytd) was $3.44 billion.

According to Citi analysts, this is more than any other US carrier. They said United's results were "very encouraging."

Moreover, the company's board authorized a new $1.5 billion share repurchase program, representing about 7% of United's market capitalization. This marks the first buyback program since its suspension in 2020 due to the COVID-19 pandemic.

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."

For the fourth quarter, United Airlines provided earnings guidance of $2.50 to $3.00 per share, which was in line with the analyst consensus of $2.75.

"While an “in-line” 4Q guide may not be terribly exciting for the stock in the aftermarket, we would expect the stock to react positively to the news of improving sequential unit revenue trends and a buyback" Bernstein analysts said in a post-earnings note. 

The airline also highlighted operational improvements, ranking first in on-time departures among major U.S. airlines for the quarter.

Senad Karaahmetovic contributed to this report. 

Source: Investing.com