United Airlines Just Dropped $1.5 Billion on Stock Buybacks—Flight Attendants Get "Pissed"

Welp, United Airlines is back at it—back in the stock buyback game, that is. After a little pandemic-induced timeout, the airline just dropped a $1.5 billion share repurchase announcement - and Wall Street, predictably, can’t get enough. Flight attendants though? Ehh, not so much. But we’ll get to that.

(Source: Giphy) 

In short, United reported earnings this week that had analysts wiping tears of joy from their eyes. They posted $3.33 per share for Q3, blowing past the very ambitious $3.17 target. And while revenue barely moved (a humble 2.5% increase to $14.84 billion), United still managed to outshine the Wall Street number crunchers, who had their hopes pinned at $14.78 billion. Cue the stock price mooning—up 13% by Wednesday, hitting its highest point since the pre-pandemic “good old days” of 2020.

(Source: LD) 

But what’s interesting here is not necessarily the numbers that United posted, it’s how they did it. Their genius move? Flying fewer planes. Yeah, you read that right. They slashed flights—because why increase supply when you can just reduce it and charge more? Less is more, baby. 

With fewer seats to go around, domestic unit revenue (aka how much money they’re squeezing out of each seat) finally turned positive in August and September. Translation: airfares are going nowhere but up. If you thought tickets were expensive now, just wait until your “cheap” holiday flight costs more than a weekend in Cabo. (Spirit Airlines is licking their chops right now, LOL) 

(Source: Seeking Alpha) 

Additionally, who’s picking up the slack with all of this? Corporate travelers, with mistresses places to be and people to see. Business revenue jumped 13%, while those sweet business class seats (the ones where they don’t hand you a granola bar and call it a meal) saw a 5% boost. Even the suckers in basic economy—where your knees are practically in the aisle—are still lining up as sales jumped 20%. 

(Source: Giphy) 

Now with that said, United’s net income actually dropped 15% to a meager $965 million. Again, costs are rising, and while United is squeezing more money out of every seat, they’re not flying quite as many butts as they used to. But, but, but… they beat friggin expectations, and right now that’s all that matters, amirite? 

(Source: Fox) 

Now on the $1.5 billion buyback front, United is piggybacking on Delta’s $5 billion buyback in May (so classic case of keeping up with the Joneses). According to CEO Scott Kirby, he’s called it a “strategic” move in order to remind everyone that “investing in our people and business will always be the top priority.” Which is great news for shareholders because buybacks equal less supply - and with less supply, and pent up demand after an earnings beat, prices go up. Win, win, win. 

(Source: Giphy) 

The bad part about all this? Flight attendants. In short,  Sara Nelson, president of the Association of Flight Attendants, took one look at that $1.5 billion number and immediately grabbed the mic. In a statement that could only be described as “brutally honest,” she said, “That money belongs to the flight attendants who worked through the pandemic and during this taxing recovery.” while also calling the buybacks a “sickness”. 

Meaning, with no new labor agreement on the horizon, the union’s not about to let this one slide. They’re already planning some informal picketing, because nothing says “We’re pissed” like a good old-fashioned protest outside corporate HQ. 

(Source: Giphy) 

So yeah, even though United’s stock is flying higher this week, it’s not all smooth skies up ahead. They’re cutting flights, and hiking prices which are good for business growth, especially with the buybacks - buuuut, flight attendants are sharpening their pitchforks like they are about to show Boeing workers how to actually get sh*t done with a strike. 

In the end, United Airlines is definitely a stock to keep an eye on going into next week, but beware… we could see some carnage within the company soon. In the meantime, enjoy your Friday and as always - stay safe and stay frosty, friends! Until next time…

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Stocks.News holds positions in United Airlines as mentioned in the article.