United Airlines (UAL) has reported its third-quarter 2024 financial results showing the airline had a “pre-tax earnings of $1.3 billion, with a pre-tax margin of 8.7%; adjusted pre-tax earnings1 of $1.4 billion, with an adjusted pre-tax margin1 of 9.7%.”
According to the report, the airline achieved “diluted earnings per share of $2.90; adjusted diluted earnings per share1 of $3.33, ahead of the third-quarter 2024 guidance provided at the start of the quarter of $2.75 to $3.25.”
United Airlines CEO, Scott Kirby said: “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. 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.”
The airline’s Board of Directors authorized a “new share repurchase program for up to $1.5 billion of outstanding shares of common stock and warrants originally issued to the U.S. Treasury under the CARES Act and Payroll Support Program, subject to a limit of $500 million in aggregate through year-end 2024.” This amount represents approximately 7% percent of the company’s market capitalization based on the closing stock price on Oct 14, 2024. This is the first share repurchase program since the suspension of the previous program in 2020 due to the COVID-19 pandemic. Unless suspended or terminated earlier by our Board of Directors, this program has no set expiration date and will therefore terminate when the company has completed all purchases authorized under the program.
United Airlines CFO 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 the quarter, the company reports that it “repurchased in the open market just over 2 million shares of UAL common stock in connection with the exercise of roughly 6.4 million warrants issued to the U.S. Treasury under the CARES Act and Payroll Support Program. The repurchase of these shares eliminated the dilution associated with the warrants exercised and are separate from the $1.5 billion share repurchase program above. The shares were purchased at an average price of $39.99.”
Under today’s $1.5 billion share repurchase program shares may be repurchased in the open market and in privately negotiated transactions, as well as accelerated repurchase agreements, depending on the capital needs of the business, the market price of UAL common stock, general market conditions, securities law limitations and other factors.
One of the key highlights of the report is United’s largest international expansion which will see the airline commence service to Dakar, Senegal.