(Reuters) - United Continental Holdings Inc (UAL.N) reported a stronger-than-expected second-quarter profit aided by higher prices and said it plans to buy back $1 billion of stock, sending its shares up nearly 4 percent.
United, formed with the 2010 merger of United and Continental, lost customers in recent years as technology changes hurt customer service. The carrier is taking steps to reduce costs that include closing its Cleveland hub and outsourcing certain jobs.
“This quarter was a pretty dramatic improvement,” said Kris Kelley, a research analyst with Janus Capital Group.
He said United’s performance on unit revenue, an important measure of passenger revenue per available seat mile, had underperformed rivals Delta Air Lines Inc (DAL.N) and American Airlines Group Inc (AAL.O) but looked to be improving. United said in an investor update it expected unit revenue to rise 2 to 4 percent in the current quarter, the same growth range projected by Delta for that period on Wednesday.
“There are definitely some pluses going on at United and they seem to be gaining some traction,” Kelley added.
Net income at United came to $789 million, or $2.01 a share, compared with $469 million, or $1.21 a share, a year earlier.
Adjusted for items including costs to ground regional jets and severance, profit came to $2.34 a share, compared with $2.19 a share expected by analysts on average, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 3 percent to $10.33 billion, buoyed by increases in the United States, Europe and Latin America. Unit revenue rose 3.7 percent in the second quarter. Yield, a measure of the average fare, rose 3 percent, United said.
United said it expects to complete a $1 billion share repurchase program within the next three years.
Shares of United were up 3.6 percent to $47.64 in morning trading.
Reporting by Karen Jacobs in Atlanta; Editing by Alden Bentley and James Dalgleish