United Airlines plans $1.5 billion share buyback, forecasts fourth-quarter earnings above estimates

United Airlines On Tuesday it said it was initiating a $1.5 billion share buyback as the carrier reported higher-than-expected earnings during the busy summer travel season and forecast stronger results for the final three months of the year.

United expects to earn $2.50 to $3 a share in the fourth quarter, up from $2 a share a year ago and the $2.68 analysts polled by LSEG estimated.

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

• Earnings per share: $3.33 adjusted vs $3.17 expected
• Revenue: $14.84 billion vs. $14.78 billion expected

It will be United's first share buyback since before the Covid-19 pandemic. U.S. airlines received more than $50 billion in government aid during the pandemic travel downturn that banned share buybacks and dividends, though airlines are still struggling for financial stability.

Southwest Airlines announced a $2.5 billion share repurchase program last month.

“Like other leading airlines and companies, we are embarking on a measured, strategic share repurchase program,” United Chief Executive Officer Scott Kirby said in a note to employees on Tuesday. “Importantly, my commitment to you is that investing in our people and our business will always be my top priority even as we launch this share repurchase program.”

For the third quarter, United earned $14.84 billion, up 2.5% from a year ago and beating analyst estimates. It reported net income of $965 million, down 15% from a year earlier.

United said domestic unit revenue was positive in August and September compared with last year as the airline cut a glut of flights that drove down fares.

Adjusted for one-time items, United reported earnings of $3.33 per share, topping Wall Street forecasts and United's estimate of $2.75 to $3.25 per share in July.

Airline executives will hold a call with analysts at 10:30 a.m. Wednesday and likely face questions about demand for the end of the year and into 2025, as well as production issues. BoeingWhile most factories were idle during the month-long machine-driven strike.