CHICAGO - United Airlines (NASDAQ:UAL) reported its financial outcomes for the third quarter of 2024, delivering pre-tax earnings of $1.3 billion and an 8.7% pre-tax margin. Adjusted figures showed a pre-tax earnings of $1.4 billion and a 9.7% margin. The airline also posted diluted earnings per share (EPS) of $2.90 and an adjusted EPS of $3.33, topping the forecasted range of $2.75 to $3.25.
The carrier experienced a robust quarter with positive revenue trends, marking an industry inflection point as unprofitable capacity exited the market. Domestic unit revenues increased year-over-year in August and September, with corporate revenues up 13% in September and premium revenues up 5% year over year. Basic Economy revenue showed a significant 20% increase from the previous year.
United Airlines CEO Scott Kirby (NYSE:KEX) recognized the team's efforts in providing a safe and punctual service, citing the removal of unproductive capacity in mid-August as a turning point for revenue trends. He expressed optimism about the airline's future positioning in the industry, fueled by improved customer experience and the United Next initiative.
The Board of Directors has authorized a new share repurchase program, allowing the buyback of up to $1.5 billion in common stock and warrants initially issued under the CARES Act and Payroll Support Program, with a $500 million limit through the end of 2024. This repurchase program, the first since the suspension in 2020 due to the COVID-19 pandemic, represents around 7% of the company's market capitalization as of October 14, 2024.
CFO Michael Leskinen highlighted the company's investments in products and people over the past four years, amounting to $22 billion and nearly $10 billion, respectively. These investments have contributed to higher profits and growing free cash flow, allowing the company to initiate a share repurchase program while continuing to invest in and deleverage the business. The company aims for net leverage below 2x in the coming years and views the buyback as the start of a consistent and disciplined capital return.
United repurchased over 2 million shares of common stock in the third quarter in connection with the exercise of around 6.4 million warrants issued under the CARES Act and Payroll Support Program, at an average price of $39.99, separate from the $1.5 billion repurchase program.
The company's third-quarter financial results also included a 4.1% increase in capacity compared to the same period in 2023, with total operating revenue of $14.8 billion, up 2.5%. However, total revenue per available seat mile (TRASM) was down 1.6%, and cost per available seat mile (CASM) increased slightly by 0.1%.
This article is based on a press release statement.
In other recent news, United Continental Holdings Inc. is expected to benefit from lower fuel prices and domestic growth, according to Barclays' recent analysis. The firm anticipates a strong quarterly report from United, driven by these factors. United's management is expected to comment on strong trans-Atlantic demand and holiday bookings. Additionally, United Airlines has announced a significant expansion of its international flight schedule for summer 2025, including eight new destinations.
In other company news, escalating tensions in the Middle East have led airlines, including United Airlines, to adjust their flight schedules, affecting services to and within the region. Analysts from TD Cowen and Citi maintain a Buy rating on United Airlines, anticipating that the company's third-quarter results will potentially exceed expectations.
These are recent developments providing investors with insights into the current state of United Airlines.
InvestingPro Insights
United Airlines' strong third-quarter performance is reflected in its current market position. According to InvestingPro data, the company's market capitalization stands at $21.04 billion, underlining its significant presence in the Passenger Airlines industry. The airline's robust financial health is further evidenced by its low P/E ratio of 7.13, suggesting that it may be undervalued relative to its earnings.
InvestingPro Tips highlight that United Airlines is trading at a low earnings multiple and has a high shareholder yield, which aligns with the company's recent announcement of a share repurchase program. This move not only demonstrates confidence in the airline's financial stability but also indicates a commitment to returning value to shareholders.
The company's strong performance is also reflected in its stock price, which is trading near its 52-week high. This is supported by InvestingPro data showing impressive price returns across various timeframes, including a 64.08% return over the past year and a 54.8% return over the last six months.
It's worth noting that 9 analysts have revised their earnings upwards for the upcoming period, suggesting positive expectations for United Airlines' future performance. This optimism is in line with CEO Scott Kirby's comments on the airline's improved positioning in the industry.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for United Airlines, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.