United shares head for pre-pandemic high after airline forecasts strong finish to 2024, plans buyback

United Airlines said Tuesday that it is starting a $1.5 billion share buyback as the carrier reported higher-than-expected earnings for the busy summer travel season and forecast strong results for the last three months of the year.

United Airlines shares were up 13% in afternoon trading Wednesday, leading the S&P 500 higher. Other airline shares were also trading sharply higher, outpacing the broader market. Shares of the airline were heading for their highest close since February 2020, before Covid-19 was declared a pandemic.

United expects to earn an adjusted $2.50 to $3.00 a share in the fourth quarter, compared to $2.00 a share a year earlier and the $2.68 analysts polled by LSEG estimated.

Here is what United reported for the third quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:

The share buyback would be United's first since before the Covid-19 pandemic. U.S. airlines received more than $50 billion in government aid during the pandemic travel slump that prohibited share repurchases and dividends, though airlines were still fighting for financial stability.

Southwest Airlines announced a $2.5 billion share repurchase program last month.

"Like other leading airlines and companies, we are initiating a measured, strategic share repurchase program," United CEO Scott Kirby said in a note to staff on Tuesday. "Importantly, my commitment to you is that investing in our people and our business will always be my top priority even while we institute this share repurchase program."

For the third quarter, United posted revenue of $14.84 billion, up 2.5% from a year earlier and above analysts' estimates. It reported net income of $965 million, down 15% from a year ago.

United said domestic