United Airlines reports 15 percent decline in Q3 profit annually
Date
10/16/2024 5:45:25 AM
(MENAFN) On Tuesday, United Airlines reported a 15 percent decline in third-quarter profit compared to the previous year, with earnings reaching USD965 million, down from USD1.14 billion. However, the airline noted improvements in revenue trends, particularly as low-fare carriers scale back their growth plans for the remainder of the year. United's revenue rose by 2.5 percent to USD14.84 billion, surpassing analysts' expectations of USD14.77 billion. The airline carried more passengers and flew them further than in the same quarter last year, yet customers paid approximately 1 percent less per mile due to weakened pricing for economy-class tickets.
The airline's directors approved a share repurchase program worth up to USD1.5 billion, marking the first buyback initiative since 2020. This decision follows a period when airlines were restricted from purchasing their own stock as part of the terms for receiving over USD50 billion in pandemic relief from the federal government. United's CEO, Scott Kirby, described the program as a "measured, strategic share repurchase," aiming to enhance shareholder value in a competitive market.
Despite the positive outlook on corporate, premium, and basic economy travel, the share buyback plan faced immediate criticism from the Association of Flight Attendants. The union, which is currently in protracted contract negotiations with United regarding pay and benefits, expressed concerns that the buyback is prioritizing investors over employees. Union president Sara Nelson called stock buybacks “a sickness that hurts workers and consumers alike,” suggesting that the airline's management is mimicking tactics from hedge fund Elliott Investment Management, which is seeking control of the board at Southwest Airlines.
As the airline industry continues to navigate the challenges posed by budget airlines and fluctuating passenger demand, United is optimistic about its financial recovery. The company reported a positive revenue per seat figure for August and September, indicating a potential rebound in pricing power as competitors reduce their flight schedules and seat availability. This shift may enhance United's profitability moving forward, particularly as it adapts to changing market dynamics and consumer behavior.
MENAFN16102024000045015839ID1108783708
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.