United Airlines ($UAL) late Tuesday reported third-quarter results that surpassed Wall Street's estimates as demand for air travel remained robust. Adjusted per-share earnings declined to $3.33 during the September quarter from $3.65 a year earlier. The Capital IQ-polled consensus called for $3.17 in normalized EPS, making United's performance particularly notable in the context of the broader aviation industry.
Operating revenue rose by an impressive 2.5% to $14.84 billion, exceeding analysts' forecast of $14.73 billion, underscoring the airline's strong market position. "Unproductive capacity left the market in mid-August, and we saw a clear inflection point in our revenue trends that propelled United to exceed third-quarter expectations,” Chief Executive Scott Kirby emphasized during a statement, explaining the strategic shifts that have led to this updated performance outlook.
Passenger revenue saw a slight increase of 1.6% year-over-year, reaching $13.56 billion, while cargo revenue reported a significant 25% increase, highlighting the resilience of United's diverse income streams. The airline’s Total Revenue per Available Seat Mile (TRASM), a key metric used to assess operational efficiency, fell by 1.6% compared to the same quarter in 2023. Looking ahead, United anticipates adjusted EPS of between $2.50 and $3 for the upcoming fourth quarter, according to an investor update.
This projection contrasts with the Street's consensus estimate, which stands at $2.81, reflecting optimistic sentiment surrounding the airline's ability to navigate the ongoing demand for air travel. Furthermore, the company’s board authorized a substantial repurchase program for up to $1.5 billion of common shares and warrants originally issued to the US Treasury as part of economic recovery measures under the Coronavirus Aid, Relief, and Economic Security Act and the Payroll Support Program.
This repurchase initiative, which marks United's first since 2020, will be subject to a cap of $500 million in 2024, indicating a proactive approach to shareholder value enhancement. With a current stock price at $64.32, a change of +0.27 represents a +0.42% increase, showcasing a positive trend in market confidence surrounding United Airlines..