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By Nivedita Bhattacharjee
WASHINGTON, Sept 5 United Airlines plans to
return cash to shareholders after paying down debt next year,
and the airline is on track to hit its target of 10 percent
return on capital, the chief financial officer said on Thursday.
United Continental Holdings Inc plans to pay off
$800 million in debt next year, which will strengthen the
balance sheet enough to allow it to return cash to shareholders,
CFO John Rainey said at the Reuters Aerospace and Defense
Rainey also said he thinks the airline industry is strong
enough to weather disruptions that a possible U.S. war in Syria
"A lot of carriers are beginning to return cash to
shareholders. Every carrier is headed down that path," he said
at the summit, held at the Reuters office in Washington, D.C.
"Clearly, we have an intention of doing that."
The $800 million debt was used for liquidity, rather than
financing aircraft, and is not something the airline wants to
carry on its books.
"Once we pay that off, our balance sheet has a very
different look than it did three or four years ago, and I think
then we can have a much more rational discussion about the best
way to increase shareholder value," Rainey said.
"It's my full intention to pay that off next year."
Rainey also said that while he was worried about the
potential effects of a U.S. strike on Syria in terms of jet fuel
prices and the airline industry, carriers were on a much more
stable footing than previously.
"Six or seven years ago, people would be talking about, 'Can
the industry survive this?'" He added that airline industry
liquidity could weather the effects of a possible war.
Regarding the Syria situation, he said United is not fully
hedged against a rise in jet fuel prices.
"I am concerned," he said. "Clearly, as jet fuel prices go
up, we're not 100 percent protected from that, and it will have
He added, however: "We've reformed ourselves as a business
and we've actually taken steps to mute the impact of these type
of exogenous events."
Separately on Thursday, United said it would recall 600
pilots who had been furloughed in previous years.
The Air Line Pilots Association union said the carrier
started laying off pilots in September 2008, leading to a total
of 1,437 pilots furloughed. United now has more than 12,000
United said a labor agreement reached on Wednesday allowed
the airline to recall the workers.
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(Editing by Alwyn Scott and Matthew Lewis)