United's third-quarter profit falls 15%, but sales trends improve

United Airlines reported Tuesday that third-quarter profit fell 15% from a year ago, but revenue trends improved as low-cost carriers scaled back their growth plans for the rest of the year.

The Chicago-based airline's directors, meanwhile, approved up to $1.5 billion to buy back shares.

United said it saw increased strength in business, premium and basic economy travel in September.

Airline executives have complained that budget airlines are cutting prices on economy class seats due to an oversupply of flights. However, their pricing power is improving as Spirit, Southwest and others trim their schedules and reduce the supply of seats for sale.

United said a closely watched number, revenue per seat, turned positive in August and September compared to a year earlier on flights within the United States, after lagging behind 2023 levels in earlier months.

The stock buyback program is United's first since 2020, when airlines were banned from buying back their own shares as a condition of receiving more than $50 billion in pandemic relief aid from the federal government.

CEO Scott Kirby said it would be “a measured, strategic share buyback program,” but was immediately rejected by the Association of Flight Attendants. The union is stuck in long-running contract negotiations with United over wages and benefits and sees the buyback plan as a sop to wealthy investors.

“Stock buybacks are a disease that harms workers and consumers alike,” said union President Sara Nelson. She suggested that United was responding to hedge fund Elliott Investment Management's attempt to gain control of Southwest Airlines' board, “and now United Airlines management is following their example to manipulate the stock and defraud workers and passengers.” .”

United posted a third-quarter profit of $965 million, down from $1.14 billion a year earlier. Excluding special items, the airline's adjusted profit was $3.33 per share, according to FactSet, beating the average analyst forecast of $3.17 per share.

Revenue rose 2.5% to $14.84 billion, beating analysts' average forecast of $14.77 billion. United carried more passengers over more miles than a year earlier, but paid 1% less per mile compared to a year ago due to weak prices for economy class tickets.

Labor costs rose more than 10%, but lower prices caused the airline's fuel expenses to fall by a similar percentage.

United forecast fourth-quarter profit of $2.50 to $3 per share, in line with analysts' average forecast of $2.76 per share.

Shares of United Airlines Holdings Inc. fell about 0.5% in after-hours trading following the release of its earnings report.