United Airlines (UAL, Financial) recently announced its financial results for the third quarter of 2024. The airline reported a profit that exceeded market expectations, driven by the growth of its core business and strategic reduction of unprofitable routes, despite being impacted by operational costs.
For Q3, United's revenue reached $14.843 billion, a 2.5% increase from the previous year, surpassing analyst expectations of $14.78 billion. Breaking it down, passenger revenue was $13.561 billion, up 1.6%; cargo revenue jumped 25.2% to $417 million; and other revenue saw a 7.9% increase to $865 million.
Operating profit fell 10% year-over-year to $1.565 billion, while net income decreased by 15.1% to $965 million. Earnings per share on a diluted basis were $2.90, compared to $3.42 in the previous year. The adjusted EPS was $3.33, beating analysts' expectations of $3.07, though down from last year’s $3.65.
Available seat miles (ASMs) were up by 4.1% to 81.541 billion, while passenger revenue per ASM (PRASM) dropped 2.4% to 16.63 cents. Total revenue per ASM decreased by 1.6% to 18.20 cents.
Unit cost increased slightly by 0.1% year-over-year to 16.28 cents, which was higher than the anticipated 16.23 cents. Excluding fuel, the unit cost rose by 6.5% to 12.26 cents. The price per gallon of aviation fuel was $2.56, lower than last year's $2.95.
CEO Scott Kirby commented on the positive revenue trends as unprofitable capacity exits the market. The reduction in flight plans by low-cost carriers towards the end of the year is expected to help maintain higher ticket prices.
Additionally, United Airlines announced a $1.5 billion stock buyback program, with plans to repurchase $500 million worth of shares in 2024. This marks the first repurchase initiative since 2020. The company aims to reduce its net leverage to below 2x in the coming years and views the buyback as the beginning of a disciplined return of capital driven by increasing free cash flow.
Looking ahead, United anticipates Q4 adjusted EPS to be between $2.50 and $3.00, with the midpoint exceeding analysts' prediction of $2.68.
