United has expanded its global footprint rapidly in Q3, 2024
United Airlines (UAL), the second largest airline in the United States, has reported better than expected performance in the third quarter of 2024 as its pre-tax earnings stand at USD 1.3 billion, with a pre-tax margin of 8.7 pc.
In a press statement, United Airlines says that it produced strong financial and operational results in the quarter. As the company expected, revenue trends improved as the industry reached an inflection point in the quarter with unprofitable capacity exiting the market. Domestic unit revenue was positive year-over-year in August and September.
It says that demand continues to be strong for the United product and its corporate revenues were up 13 pc year over year in September, and in the quarter premium revenues continued to remain resilient and were up 5 pc year over year and revenue from Basic Economy was up 20 pc year over year.
United Airline says that its capacity increased by 4.1 pc compared to Q3, 2023 and its total operating revenue was at USD 14.8 billion, reflecting a growth of 2.5 pc compared to Q3, 2023. Its net profit in the quarter was USD 1 billion.
In the quarter, United says announced an industry-leading agreement with SpaceX to bring Starlink’s Wi-Fi service to more than 1,000 of the airline’s mainline and regional aircraft, providing customers free, fast, reliable internet connectivity on passenger flights as soon as late 2025. Another highlight of the quarter was that just last week, United announced the largest international expansion in the airline’s history, bringing service to eight new Atlantic and Pacific destinations in summer 2025.
United says it will serve more international destinations across the Atlantic and Pacific than all other US carriers combined with 800 daily flights to and from 147 international destinations, including nearly 40 not served by any other US airline.
Operated the busiest third quarter as measured by revenue passenger volumes in company history, setting the record for the most ever passengers carried for the July 4 and Labor Day holidays and for the highest number of customers carried in a day at 552,000 in July. It also set its own record for the highest daily customer average in a month of September with 474,000 carried.
United says it finished the quarter with the best on time departure amongst major US airlines in six of seven of United’s US hub locations, making it the 30th quarter in a row leading on time departure at United’s Chicago O’Hare hub and 10th in a row leading Denver hub.
Scott Kirby
“I appreciate the entire United team coming together to take care of our customers by operating a safe and on-time airline this summer. 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,’’ says Scott Kirby, CEO, United Airlines.
The statement adds that United’s Board of Directors authorised a new share repurchase programme for up to USD 1.5 billion of outstanding shares of common stock and warrants originally issued to the US Treasury under the CARES Act and Payroll Support Programme, subject to a limit of USD 500 million in aggregate through year-end 2024.
This amount represents approximately 7 pc of the company’s market capitalisation based on the closing stock price on October 14. This is the first share repurchase programme since the suspension of the previous programme in 2020 due to the Covid-19 pandemic. Unless suspended or terminated earlier by our Board of Directors, this programme has no set expiration date and will therefore terminate when the company has completed all purchases authorised under the programme.
Michael Leskinen
“In the last four years, we have invested USD 22 billion in our product and nearly USD 10 billion in our people. Those investments have enabled higher profits and are now contributing to growing free cash flow. We are now in a position to add a share repurchase programme as we continue to invest in and deleverage our business. We are simultaneously targetting net leverage below 2x in the next few years. We intend this buyback to be the beginning of a consistent and disciplined return of capital that is paced by our ability to generate increasing levels of free cash,” says Michael Leskinen, CFO, United Airlines.
In the quarter, the company 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 US Treasury under the CARES Act and Payroll Support Programme. The repurchase of these shares eliminated the dilution associated with the warrants exercised and are separate from the USD 1.5 billion share repurchase programme above. The shares were purchased at an average price of USD 39.99, it says.
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