September 5, 2013 / 5:11 PM / in 4 years

REUTERS SUMMIT-United CFO: airline to return cash; concerned about Syria impact

(For other news from Reuters Aerospace and Defense Summit, click on www.reuters.com/summit/Aero13 , adds comments by CFO, company background)

By Nivedita Bhattacharjee

WASHINGTON, Sept 5 (Reuters) - 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 Summit.

Rainey also said he thinks the airline industry is strong enough to weather disruptions that a possible U.S. war in Syria could bring.

“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 some impact.”

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 pilots.

United said a labor agreement reached on Wednesday allowed the airline to recall the workers. Follow Reuters Summits on Twitter @Reuters_Summits (For more summit stories, see ) (Editing by Alwyn Scott and Matthew Lewis)

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